CHAPTER 2 - COST OF HEALTH CARE
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CHAPTER 2 - COST OF HEALTH CARE
Originally written by Meena Seshamani, M.D., Ph.D., Johns Hopkins University School of Medicine. Updated by Bill Erwin, then of the Alliance for Health Reform, and by Zack Thompson of the Alliance, and by Marilyn Werber Serafini in January 2013.
This chapter was made possible by the Robert Wood Johnson Foundation.
- The United States spent $2.7 trillion on health care in 2011, or $8680 per person. This amounted to 17.9 percent of the nation’s gross domestic product (GDP).1
- U.S. health care spending rose 3.9 percent from 2010 to 2011, marking the third consecutive year of relatively slow growth. 2
- Health care costs more than tripled from 1990 to 20113 and are projected to rise to 19.6 percent of GDP in 2021. 4
- The average cost of an employer-based family insurance policy in 2011was $15,073, close to the annual earnings of a full-time minimum wage job.5
- Premiums for employer-sponsored family health coverage increased by 9 percent from 2010 to 2011.6
- Since 1997, per capita health spending has grown an average of 1.9 percentage points faster than per capita GDP.7
- The exclusion of employer health premium contributions from employee taxable income is the nation’s largest tax expenditure, totaling a projected $184 billion in federal revenue passed up in FY2012.8
- The United States spends more per capita on health care than any other nation in the 40-country Organization for Economic Co-operation and Development (OECD).
- OECD countries – most of which are developed nations – spent an average of about 9.5 percent on gross domestic product on health expenditures in 2009. The U.S spent 17.4 percent of GDP. Next closest was the Netherlands, at 12 percent.9
- The Patient Protection and Affordable Care Act of 2010 (ACA) supports pilot testing of several new provider payment mechanisms that could help constrain spending, including accountable care organizations, patient-centered medical homes and bundled payments.10
- The ACA also establishes a new Independent Payment Advisory Board whose charge is to recommend specific Medicare cost saving techniques to the Congress if expected cost growth targets are not hit.11
For the third consecutive year, U.S. health care spending in 2011 grew at a relatively low rate, raising questions about how much was related to the last recession, and whether the trend would continue.
In 2011, the United States spent $2.7 trillion on health care, an average of $8,680 per person. Growth in national health spending was similar to that of growth in the economy (Gross Domestic Product) in 2010 and 2011.12
At the same time, personal health care spending increased in 2011, by 4.1 percent, up from 3.7 percent in 2010, mostly due to more spending on prescription drugs and physician and clinical services.13
Health care spending constituted 17.9 percent of the gross domestic product (GDP) in 201014 and is projected to rise to 19.6 percent of GDP in 2021.15 Princeton University economist Uwe Reinhardt notes that at the current rate of increase, health spending could make up more than 40 percent of GDP by 2050.16
Medicare and Medicaid together, which made up 6.4 percent of GDP in 2010,17 are expected to equal 7.8 percent in 2020, making health spending a major force behind rising federal spending and projected deficits in the coming years (and an obvious target for addressing budget imbalances).18 Spending by federal, state and local governments accounts for 44.9 percent of overall health spending. Spending by households makes up 28 percent of the total, while spending by private business accounts for 21 percent, 19
Federal spending on Medicare would be reduced by $48 billion per year, according to the Government Accountability Office, if fraudulent or improper payments were eliminated. This is more than 9 percent of the $509 billion that the government spent on Medicare in FY 2010.20 The federal government is working to reduce fraud and abuse. Since 1997, when the federal Health Care Fraud and Abuse Control program was launched, almost $21 billion has been won back for the Medicare trust funds in fraud judgments, settlements and administrative "impositions."21 But this pales in comparison to the size of the problem.
For every $100 spent on health care, $31 goes to hospitals, another $26.50 to professional services (including physicians and dentists), $10 to prescription drugs bought at retail, $5.50 to nursing care facilities and continuing care retirement communities and $2.70 to home care.22
Health spending in the U.S. stands above that in other developed countries, both per capita and as a percent of GDP. The United States spends more on health care as a percent of GDP than any other nation in the 40-country Organization for Economic Co-operation and Development (OECD).23
What is driving our unsustainable rate of increase in costs? A 2012 issue brief from the Alliance for Health Reform lays out almost two dozen possible contributors – everything from unhealthy diets and lack of exercise to consolidation among health care providers.24 A recent analysis by The Commonwealth Fund suggests that the higher spending is likely due to higher prices and maybe readily accessible technology and greater obesity.25
Consequences of Rising Costs
The rise in health care costs has affected the health and financial well-being of individuals and families, and the fiscal futures of employers and governments.
Especially during the recent recession, health care costs have been a source of stress for private sector employers. Some major U.S. automakers, for example, note that they spend more on health care than on steel for their cars.27
The average cost of an employer-based family insurance policy in 2011 was $15,073,29 close to the annual earnings of a full-time minimum wage job. Premiums for employer-sponsored family health coverage more than doubled from 2000 to 2011,30 and increased faster than other economic indicators.
Likewise, employees and self-employed individuals have been feeling the pinch. Almost a third of respondents in a December 2010 poll by the Kaiser Family Foundation said they or another household member had put off getting needed health care because of cost concerns. One out of five respondents said they had had a serious problem paying for health care and health insurance as a result of the recession.31
The amounts that workers pay for their coverage have far outpaced inflation. In 2000, workers paid an average of $135 monthly for family coverage and $28 for single coverage. By 2011, those amounts had grown to $344 (up 155 percent) and $77 (a 175 percent rise).32 Inflation over that period amounted to 31.5 percent.33
Employers compensate for rising health care costs in part by keeping a lid on wages. One study estimates that an employer’s expenses for health benefits are offset by a 9 percent reduction in wages.35
LIKELY POLICY DEBATES
As health care costs continue to place pressure on both public and private insurers, debates about implementation of the Affordable Care Act and entitlement reform are involving ways to constrain costs.
The task has never been easy. Experts differ on exactly which factors are the most important drivers of costs. At the April 2012 briefing held by the Alliance for Health Reform and other sponsors, mentioned earlier, some experts pointed to the much higher prices paid to providers in the United States compared to other countries. Others pointed to the high volume of care delivered, noting that in areas with a concentration of physicians, costs tend to be higher overall. Still others pointed to studies indicating that about a third of care delivered is actually unnecessary.37
Some of the methods tried or proposed include the following:
Increased Cost Sharing
Cost-sharing involves out-of-pocket spending by consumers for insurance deductibles, coinsurance, copayments, and premium contributions (see glossary for definitions). As health care costs have risen, employers and public programs have shifted costs to consumers.
By increasing the amount of out-of-pocket contributions from patients, cost-sharing schemes can increase patient cost-awareness in health care decision-making, providing an incentive to pursue cost-efficient treatments. One example of this effect is tiered copayments for prescriptions, which give consumers an economic incentive to select generic medications rather than brand name drugs.
Consumer-Driven Health Plans
Making patients more aware of costs is also the reasoning behind consumer-directed health plans (CDHPs), which link a high-deductible health plan with tax-sheltered health reimbursement accounts (HRAs) or health savings accounts (HSAs). (See glossary for definitions.) Patients make out-of-pocket health care payments from their HRA or HSA until they have reached their yearly deductible amount, at which point their health plan starts picking up expenses.
Enrollment in such plans is growing steadily. A survey of large employers by the Mercer company found that in 2011, 13 percent of all covered employees were in consumer-directed health plans – a rapid increase from just 3 percent of covered employees in 2006.39
One factor that may affect the cost of CDHPs: Those enrolled in such plans consistently report better health status than employees in traditional health plans.41
Changes in Provider Reimbursement
Payments to physicians and hospitals made up 51 percent of all health care spending in 2010.43 Thus, many methods have been tried to reduce payments to providers as a way of reining in health care costs.
Medicare is moving toward pay-for-performance reimbursement, whereby a specified percentage of a hospital’s payment would be based on performance measures, ranging from giving smoking cessation advice to perioperative antibiotic administration.44
Payers can also simply decrease the amounts they pay providers. Medicare’s Sustainable Growth Rate (SGR) policy is supposed to do this, aiming to keep total spending for physician services in Medicare Part B under a defined target figure.46 The Balanced Budget Act of 1997 significantly cut Medicare reimbursements to providers. Similarly, several states have reduced or frozen Medicaid reimbursement rates in response to budget shortfalls.47 In the private sector, insurance companies try to negotiate lower rates.
However, each of these policies can have unintended consequences. Providers may (and do) drop patients from lower-paying insurance plans, or refuse to accept them in the first place.48 Congress has repeatedly restored the physician payment cuts mandated by the Sustainable Growth Rate without implementing other ways to achieve the targeted savings.49 And there is some (albeit conflicting) evidence to suggest that cutbacks to hospitals may decrease the quantity of services provided and adversely affect patient outcomes,50 calling into question the sustainability of further price cuts.
For these and other reasons, current payment reform discussions are less about price cuts and more about changing the structure of provider payment, from very specific pay for volume fee-for-service – which has led us to spending almost 18 percent of GDP on health care – to more global payments for value, i.e., paying for a large group of related services and for longer periods of time, and making the full payment only if quality, efficiency and patient satisfaction targets are all met.
The core idea is that cost growth can be reduced over time if providers have to work more efficiently, patients have more information so they can make better decisions, and payers reward demonstrated value. This is why some analysts assess the payment reform pilot programs as the most promising delivery system components of the new health reform law.
The Affordable Care Act includes a number of features that are designed to buttress these pilots – and the newly created Center for Medicare and Medicaid Innovation (CMMI) – as they encourage the evolution of our delivery system from its focus on volume toward a more sustainable focus on value and health.
The ACA also signals a new approach to payment by reducing what the Medicare Payment Advisory Commission has concluded are overpayments to Medicare Advantage plans relative to the costs of their enrollees,51 and by reducing Medicare’s formerly automatic market basket update payments to hospitals. This in essence forces the plans to achieve efficiencies at the same rate as the economy as a whole, in part by reducing the price of a host of procedures, (e.g., imaging) whose volume has been exploding more for economic than for clinical value reasons.
Among the new payment models that are explicitly included in the ACA, and that many analysts think are most promising for CMMI to develop and test across various locales and payers, are:52
- Accountable care organizations (ACOs) – These entities are aimed at aligning the financial incentives of hospitals and physicians so that they assume full responsibility for the health of a defined patient population. They will accept some financial risk in order to share in the savings compared to baseline trends or regional benchmarks if they deliver demonstrably high quality and effective care;
- Patient-centered medical homes – Medical homes, which represent a team approach to the ambulatory management of the chronically ill, combine the insights of physicians, non-physicians and patients themselves (or their advocates). Medical homes, in conjunction with cooperating specialists and hospitals, could reduce unnecessary hospitalizations and emergency department use and also share in the savings from doing so.
- Bundled payments – By linking the financial interests of hospitals and post-acute providers (and potentially with pre-acute or even primary care providers), bundled payments would provide powerful incentives for the coordination of care across settings. Providing incentives to coordinate, and better communicate about, care is increasingly seen as a necessary pre-condition for making our system deliver more value and become sustainable.
· Independent Payment Advisory Board – This group’s charge is to recommend specific Medicare cost saving techniques to the Congress if expected cost growth targets are not hit. Members will be appointed by the president and confirmed by the Senate. In an unprecedented delegation of authority, the board’s recommendations will take effect automatically unless Congress substitutes other techniques that the Medicare actuary thinks would be equally effective.
· "Cadillac tax" – The excise tax on high-cost health insurance plans (the so-called "Cadillac tax") sends a very clear signal to the private sector that failure to get serious about cost growth containing in the long run will result in substantial penalties for employers, workers and insurers.
Health Information Technology
Substantial financial support for health information technology (IT) expansion occurred early in the 111th Congress. Electronic medical records can result in improved coordination of care among health care providers, reduce medical errors, and enable easier, standardized measurement of health care cost and quality. Moreover, improved clinical decision support for providers could decrease variability in the use of health care services.
But whether health IT can save substantial sums is as yet unanswered. Peter Orszag, former director of the Office of Management and Budget, concluded that health information technology alone is not sufficient as a cost saver without other simultaneous changes in the health care system.53
Chronic Disease Management
Twenty years ago, intensive inpatient hospital services accounted for most health spending growth. More recently, much of the growth has been due to chronic conditions such as diabetes, arthritis, hypertension and kidney disease.54 A greater prevalence of chronic disease in the U.S. compared to its European counterparts, and higher rates of medication treatment of chronic diseases, are also believed to underlie some of the health care cost differences between the U.S. and its European counterparts.55
Therefore, the prevention of chronic disease, and the improved, coordinated management of chronic disease once it develops, are critical to providing more cost-efficient, high quality care.
But disease management has had mixed results as a cost-containment tool so far. Eight pilot programs conducted by Medicare did not reduce costs, largely because the sickest and most vulnerable (and thus most costly) patients were less likely to agree to participate in disease-management efforts.57 Other studies have shown that efforts at preventing and dealing with chronic diseases typically add to health care spending, rather than reducing it. A review of 1,500 interventions for prevention and treatment found that about 20 percent did lower costs. The rest added more costs than they saved.58
Expenditures for prescription drugs at the retail level made up more than 10 percent of overall health spending in 2011.60 Drug spending increased 2.9 percent from 2010 to 2011, according to the Centers for Medicare and Medicaid Services. This was an increase from the previous year, when drug spending rose 1.2 percent, but still a deceleration from the 5.1 percent growth in 2009, 3.1 percent in 2008 and 10 percent in 2007.61
Some suggest the following ways that government might lower drug costs: using the large market share of the elderly population in Medicare to negotiate lower prices with pharmaceutical companies, allowing importation of medications from other countries where they are cheaper, or revising patent laws to allow for generics to be brought to the market sooner.
Pharmaceutical companies challenge all of these methods. Estimates of savings from government price negotiations are modest.62 Safety questions arise with imported drugs. Another general concern is that pharmaceutical profits provide the needed capital and incentive for research and development. In 2002, 82 percent of the investment by global pharmaceutical companies was spent in the United States, and pharmaceutical companies employ over 223,000 American workers.63
TAX EXCLUSION FOR EMPLOYER-SPONSORED HEALTH INSURANCE
The portion of an employee’s health insurance premium paid by the employer is not counted as taxable income. This exclusion is the largest single line item of revenue foregone by the federal government each year, amounting to a projected $184 billion in FY2012.65
During the debate on health reform in the 11167 Congress, not enough votes were to be found to end the tax exclusion for employer-sponsored coverage. The "Cadillac tax" mentioned earlier was a fallback position, since it also had the effect of making health coverage more expensive relative to other goods.
Many other cost-containment ideas have been implemented or proposed. These include reducing public program fraud and abuse, capping amounts paid out in malpractice judgments, boosting efforts to prevent disease, and sending Americans overseas for major surgery in less expensive countries. None to date has emerged as having a major impact on overall costs.68
TIPS FOR REPORTERS
- Consideration of health care quality and outcomes goes hand-in-hand with issues of health care costs.
- Consider all of the various players in looking at health care costs. This includes health care providers, patients, payers, government, employers (large and small), employees and health insurance plans. Each will have different interests and will be affected differently by policy changes.
- The financial effects of health care policy should be considered in both the short and long term; a short-term investment may lead to long-term cost savings.
- The way health care is financed can affect the way health care is provided. New financing mechanisms in the health reform law, such as bundling payments to providers, and cutbacks, such as to hospitals and Medicare Advantage plans, could change health care delivery in dramatic ways, for better or worse.
- Contact local employers, both small and large, and find out if they believe the Affordable Care Act is affecting their costs, either up or down.
- See what your local hospitals and physicians think about new payment methods contained in the Affordable Care Act, such as bundled payments. Check out the Prometheus payment model (www.prometheuspayment.org).
- Find out what kinds of changes local employers have made to their health plans in terms of increased cost-sharing (copayments, deductibles), alternative plan structures such as Health Savings Accounts, or dropping coverage. What do they consider to be the pros and cons of each option? How have employees reacted to such changes?
- Interview providers about whether the level of cost-consciousness in health care has changed in recent years, among providers and among patients. What kinds of efforts have been made by providers to incorporate cost in management decisions?
- Many hospitals and physician offices have adopted new health information technologies. Are any of these technologies saving money yet, or only adding to expenses?
- Interview local hospital officials to find out what utilization management or education programs have been or are being implemented to try to make health care provision more cost-efficient. This could include an examination of physician practices compared to their peers, programs to prevent medical errors and complications, and health prevention.
- Interview employers as to what employee wellness, educational, or health utilization programs they have implemented to try to rein in health care costs. Have they found these programs to make a difference? How have employees responded to them?
- Contact local government officials and find out what the challenges they face in covering Medicaid patients and administering public health programs. What measures have been taken to manage the costs? How are the effects of the recession affecting funding for public health programs?
- What cost containment lessons are being learned in reform-oriented states, such as Massachusetts and Vermont? For instance, a Vermont law enacted in May 2010 caps hospital budget increases. How is this working out?
- Contact administrators at local health insurance plans to find out which areas have generated high costs and what efforts have been made to streamline care in those areas. Examples could include efforts to move away from care provided in the emergency room setting toward primary care office visits; wellness and prevention programs; and incentive structures for providers.
- Conduct a round-table discussion or focus group with members of the community to discuss rising health care costs. What do they think are the causes? Would higher co-payments and deductibles make them more cost conscious in their decisions? Would it lead them to not access care? What are areas to target?
Henry Aaron, Senior Fellow, Economic Studies, Brookings Institution, 202/797-6128, firstname.lastname@example.org
Drew Altman, President and CEO, Kaiser Family Foundation, 650/854-9400
Joseph Antos, Wilson H. Taylor Scholar in Health Care and Retirement Policy, American Enterprise Institute, 202/862-5938, email@example.com
Katherine Baicker, Professor of Health Economics, Department of Health Policy and Management, Harvard University School of Public Health, 617/432-5209, KBaicker@hsph.harvard.edu
Robert Berenson, Senior Fellow, Urban Institute, 202/833-7200
Michael Cannon, Director of Health Policy Studies, Cato Institute, 202/789-5200, firstname.lastname@example.org
Michael Chernew, Professor of Health Care Policy, Harvard Medical School, Harvard University, 617/432-0174, email@example.com
Gary Claxton, Vice President/Director, Health Care Marketplace Project, Kaiser Family Foundation, 202/347-5270
Alan Cohen, Executive Director, Health Policy Institute, Boston University, 617/353-9222, firstname.lastname@example.org
David Cutler, Otto Eckstein Professor of Applied Economics, Harvard University, 617/496-5216
Doug Holtz- Eakin, President, American Action Forum, 202/559-6420
Robert Friedland, Department of Health Systems Administration, School of Nursing and Health Studies, Georgetown University, 202/687-1287, email@example.com
Paul Fronstin, Director, Health Research and Education Program, Employee Benefit Research Institute, 202/775- 6352, firstname.lastname@example.org
Jon Gabel, Senior Fellow, National Opinion Research Center, 301/634-9313, Gabel-Jon@norc.org
Paul Ginsburg, President, Center for Studying Health System Change, 202/484-5261, email@example.com
Robert Greenstein, Founder and Executive Director, Center on Budget and Policy Priorities, 202/408-1080, firstname.lastname@example.org
Jonathan Gruber, Professor of Economics, Massachusetts Institute of Technology, 617/253-8892
Stuart Guterman, Assistant Vice President, Payment System Reform, The Commonwealth Fund, 202/292-6735, SXG@cmwf.com
John Holahan, Director of Health Policy Research, Urban Institute, 202/261-5666
Pamela Larson, Executive Vice President, National Academy of Social Insurance, 202/452-8097, email@example.com
Larry Levitt, Vice President, Kaiser Family Foundation, 650/854-9400
Jack Meyer, Managing Principal, Health Management Associates, 202/785-3669, firstname.lastname@example.org
Tom Miller, Resident Fellow, American Enterprise Institute, 202/862-5886, email@example.com
Marilyn Moon, Senior Vice President and Director of the Health Program, American Institutes for Research, 301/592-2101, MMoon@AIR.org
Joseph Newhouse, John D. MacArthur Professor of Health Policy and Management, Harvard University, 617/432-1325, firstname.lastname@example.org
Len M. Nichols, Professor of Health Policy and Director, Center for Health Policy Research and Ethics, George Mason University, 703/993-1978, email@example.com
Ron Pollack, Executive Director, Families USA, 202/628-3030, Communications Director: David Lemmon -- firstname.lastname@example.org
Uwe Reinhardt, James Madison Professor of Political Economy, Princeton University, 609/258- 4781
Robert Reischauer, Urban Institute, 202/833-7200
Alice Rivlin, Senior Fellow, Economic Studies, The Brookings Institution, email@example.com
Jack Rodgers, Director, Economic Policy Analysis Group, PricewaterhouseCoopers, 202/414-1646
John Rother, President and CEO, National Coalition on Health Care, 202/638-7151, JRother@nchc.org
Diane Rowland, Executive Vice President, Kaiser Family Foundation, 202/347-5270, firstname.lastname@example.org
Thomas Saving, Director, Private Enterprise Research Center, 979/845-7559, email@example.com
Cathy Schoen, Senior Vice President, Policy, Research and Evaluation, The Commonwealth Fund, 212/606-3800, firstname.lastname@example.org
Stephen Schondelmeyer, Director, Prime Institute, University of Minnesota, 612/624-9931
Gerald M. Shea, Assistant to the President for External Affairs, AFL-CIO, 202/637-5000, email@example.com
James Tallon, President, United Hospital Fund, 212/494-0700, firstname.lastname@example.org
Ken Thorpe, Professor and Chair, Rollins School of Public Health; Executive Director, Partnership to Fight Chronic Disease Advisory Board, Emory University, 404/727-3373
Grace-Marie Turner, President, Galen Institute, 703/299-8900
Steve Zuckerman, Senior Fellow, Urban Institute, 202/833-7200
Tom Bradley, Unit Chief, Health Systems and Medicare Cost Estimates Unit, Congressional Budget Office, 202/226-9010
Stephen Heffler, Director, National Health Statistics Group, Office of the Actuary, Centers for Medicare and Medicaid Services, 410/786-1211
Cynthia Bascetta, Managing Director, Health Care, Government Accountability Office, 202/512-7114, email@example.com
Mark Miller, Executive Director, Medicare Payment Advisory Commission, 202/220-3700, firstname.lastname@example.org
Richard Rimkunas, Deputy Assistant Director, Domestic Social Policy Divison, Congressional Research Service, 202/707-7334, email@example.com
Brenda Craine, Director of Media Relations, American Medical Association, 202/789-7447, firstname.lastname@example.org
Alissa Fox, Senior Vice President, Office of Policy and Representation, Blue Cross Blue Shield Association, 202/626-8681, email@example.com
Mary Grealy, President, Healthcare Leadership Council, 202/452-8700, firstname.lastname@example.org, email@example.com (assistant)
George Halvorson, Chairman and CEO, Kaiser Permanente, 510/271-5660
Karen Ignagni, President and CEO, America's Health Insurance Plans, 202/778-3200, firstname.lastname@example.org
Charles Kahn, President, Federation of American Hospitals, 202/624-1500
Frank McArdle, Aon Hewitt, 847/295-5000, email@example.com
Edwina Rogers, Vice President, Health Policy, The ERISA Industry Committee, 202-789-1400, firstname.lastname@example.org
Rick Smith, Senior Vice President for Policy and Research, PhRMA, 202/835-3400, email@example.com
Reed Tuckson, Senior Vice President, UnitedHealth Group, 952-936-1253, firstname.lastname@example.org
1 Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team (2012). "Growth in US Health Spending Remained Slow In 2010." Health Affairs, 31, no. 1, p. 209. (www.healthaffairs.org)
2 Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team (2012). "Growth in US Health Spending Remained Slow In 2010." Health Affairs, 31, no. 1, p. 209. (www.healthaffairs.org)
3 Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team (2012). "Growth in US Health Spending Remained Slow In 2010." Health Affairs, 31, no. 1, p. 209. (www.healthaffairs.org)
4Sean P. Keehan, Andrea M. Sisko, Christopher J. Tuffer and others (2012). "National Health Spending Projections Through 2020." Health Affairs, 30, no. 8, p. 1595. (www.healthaffairs.org)
5 Kaiser Family Foundation (2011). Employer Health Benefits 2011 Annual Survey. Exhibit 1.1, Sept. 27, 2011. ( www.kff.org) and U.S. Dept. of Labor. "Minimum Wage." (www.dol.gov/dol/topic/wages/minimumwage.htm) Downloaded April 25, 2012.
6Kaiser Family Foundation (2011). Employer Health Benefits 2011 Annual Survey., Sept. 27, 2011. ( www.kff.org).
7 Calculated from Center for Medicare and Medicaid Services, Table 1: National Health Expenditures Aggregate, Per Capita Amounts, Percent Distribution, and Average Annual Percent Growth, by Source of Funds: Selected Calendar Years 1960-2010, downloaded April 25, 2012,.(www.cms.gov/NationalHealthExpendData/downloads/tables.pdf)
8Office of Management and Budget. "Analytical Perspectives, Budget of the United State Government, Fiscal Year 2012." P. 243. (www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/receipts.pdf)
9 OECD (2011). "Health spending continues to outpace economic growth in most OECD countries." News release, June 30. (http://bit.ly/l8v1Kc) "
10 David M. Cutler, Karen Davis and Kristof Stremikis (2010). "The Impact of Health Reform on Health System Spending." Center for American Progress and The Commonwealth Fund, May 21. (www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2010/May/1405_Cutler_impact_hlt_reform_on_hlt_sys_spending_ib_v4.pdf)
11 H.R. 3590, The Patient Protection and Affordable Care Act." 111th Cong. (enacted). Section 3403. (http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf). The name of the entity, earlier called the Independent Medicare Advisory Board, is changed by Section 10320.
12 Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team (2012). "Growth in US Health Spending Remained Slow In 2010." Health Affairs, 31, no. 1, p. 209. (www.healthaffairs.org)
13 Anne B. Martin, David Lassman, Lekha Whittle and others (2011). "Recession Contributes to Slowest Annual Rate of Increase in Health Spending in Five Decades." January.(www.healthaffairs.org)
14 Sean P. Keehan, Andrea M. Sisko, Christopher J. Tuffer and others (2012). "National Health Spending Projections Through 2020." Health Affairs, 30, no. 8, p. 1595. (www.healthaffairs.org)
15 Uwe Reinhardt (2010). "The Perennial Quest to Lower Health Care Spending." New York Times, Sept. 24. (http://economix.blogs.nytimes.com/2010/09/24/the-perennial-quest-to-lower-health-care-spending/)
16 Calculations based on Exhibits 1 and 3 from Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team (2012). "Growth in US Health Spending Remained Slow In 2010." Health Affairs, 31, no. 1, p. 209. (www.healthaffairs.org)"
17 Calculations based on Exhibits 1 and 5 in Sean P. Keehan, Andrea M. Sisko, Christopher J. Tuffer and others (2012). "National Health Spending Projections Through 2020." Health Affairs, 30, no. 8, p. 1595. (www.healthaffairs.org)
18 Anne Martin, David Lassman, Lekha Whittle and others (2011). "Recession Contributes to Slowest Annual Rate of Increase in Health Spending in Five Decades." January.(www.healthaffairs.org)
19 Politico (2011). "GAO: Medicare losing $48 billion." March 2. www.politico.com/news/stories/0311/50543.html
20Dept. of Health and Human Services and Dept. of Justice (2012). “Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2011.” P.3. (http://oig.hhs.gov/publications/docs/hcfac/hcfacreport2011.pdf)
21Calculations based on Exhibit 1 in Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team (2012). “Growth in US Health Spending Remained Slow In 2010.” Health Affairs, 31, no. 1, p. 209. (www.healthaffairs.org)
22 Mark Pearson (2009). "Why does the United States spend so much more than other countries?" Written statement to the Senate Special Committee on Aging. OECD, Sept. 30, Chart 1. (www.oecd.org/dataoecd/5/34/43800977.pdf ) OECD (2009), Expensive Health Care is Not Always the Best Care, Chart 5, (http://www.oecd.org/document/14/0,3343,en_2649_37407_44216846_1_1_1_1,00.html.)
23 Alliance for Health Reform (2012). "Cost Drivers in Health Care." Issue brief, April. (www.allhealth.org/briefingmaterials/Ebelerissuebrief-2269.pdf)
24 D. Squires (2012). "Explaining High Health Care Spending in the United States: An International Comparison of Supply, Utilization, Prices and Quality." The Commonwealth Fund, May. (www.commonwealthfund.org/Publications/Issue-Briefs/2012/May/High-Health-Care-Spending.aspx)
25 CNNMoney.com (2006). "Wagoner asks for modest health reforms." July 13. (http://money.cnn.com/2006/07/13/news/companies/gm_healthcosts/index.htm).
26 Downey, K (2004). "A heftier dose to swallow." Washington Post, Marc 6, p. E01. (http://www.washingtonpost.com/ac2/wp-dyn/A34899-2004Mar5?language=printer).
27 Kaiser Family Foundation (2011). Employer Health Benefits 2011 Annual Survey. Exhibit 1.1, Sept. 27, 2011. ( www.kff.org). And LaborLawCenter (2008). "Federal Minimum Wage Increase for 2007, 2008, 2009." Updated June 12. (www.laborlawcenter.com/t-federal-minimum-wage.aspx ).
28 Kaiser Family Foundation and Health Research and Educational Trust (2011). "Employer Health Benefits Survey 2011." Exhibit 2, Sept. 27. ( www.kff.org)
29 Kaiser Family Foundation (2010). "Kaiser Health Tracking Poll: December 2010." Chartpack, p. 8. (www.kff.org)
30 Kaiser Family Foundation (2011). Employer Health Benefits 2011 Annual Survey. Exhibit 6.2, Sept. 27, 2011. ( www.kff.org).
31 Determined using U.S. Bureau of Labor Statistics inflation calculator ( http://data.bls.gov/cgi-bin/cpicalc.pl ).
32 Patricia G. Ketsche and William S. Custer (2004). "Impact of Health Insurance Benefits on Wages." Presentation at AcademyHealth conference, San Diego, no. 21, abstract no. 960. (http://gateway.nlm.nih.gov/MeetingAbstracts/ma?f=103623994.html).
33 Alliance for Health Reform and other funders (2012). "Health Care Costs: The Role of Prices and Volume." April 19. (www.allhealth.org/briefing_detail.asp?bi=231)
34 Mercer (2011). "Employers accelerate efforts to bring health benefit costs under control." News release, Nov. 16. (www.mercer.com/press-releases/national-survey-employer-sponsored-health-plans)
35 Employee Benefit Research Institute (2012). "Characteristics of the Population with Consumer-Driven and High-Deductible Health Plans, 2005-2011." News release, April. (www.ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=5046)
36 Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team (2012). "Growth in US Health Spending Remained Slow In 2010." Health Affairs, 31, no. 1, p. 209. (www.healthaffairs.org)
37 Charland, Kim (2007). "Pay for performance comes to Medicare in 2009." Healthcare Financial management 2007; 61(9):60-4.
38 Congressional Budget Office (2006). "The Sustainable Growth Rate Formula for Setting Medicare’s Physician Payment Rates." Sept. 6. (www.cbo.gov/ftpdocs/75xx/doc7542/09-07-SGR-brief.pdf ).
39 Coughlin, Teresa; Zuckerman Stephen (2005). "Three Years Of State Fiscal Struggles: How Did Medicaid And SCHIP Fare?" Health Affairs Web Exclusive, Aug. 16. (www.healthaffairs.org).
40 R. Vesely (2008). "Ain’t no sunshine after 10% Medicaid rate cute in California." Modern Healthcare; 38(27): 17. (http://www.modernhealthcare.com/article/20080707/SUB/455025920/-1/toc07.07.08 ).
41 Congressional Budget Office (2006). "The Sustainable Growth Rate Formula for Setting Medicare’s Physician Payment Rates." Sept. 6. (www.cbo.gov/ftpdocs/75xx/doc7542/09-07-SGR-brief.pdf ). See also: Pear, Robert (2008). "Long-Term Fix Is Elusive In Medicare Payments." New York Times, July 13. (www.nytimes.com).
42 Seshamani, Meena; Zhu, Jingsan; Volpp, Kevin (2006). "Did postoperative mortality increase after the implementation of the Medicare Balanced Budget Act?" Medical Care; 44(6): 527-533.
43 Shen, Yu-Chu (2003). "The effect of financial pressure on the quality of care in hospitals." Journal of Health Economics 2003L 833:1-27. (http://ideas.repec.org/a/eee/jhecon/v22y2003i2p243-269.html ).
44 Dranove D and White WD (1998). "Medicaid-dependent hospitals and their patients: How have they fared?" Health Services Research. 33(2): 163-185.
45 MedPAC (2010). "Fact Sheet: Report to the Congress, March 2010." (www.medpac.gov/documents/Mar10_FactSheet.pdf)
46 H.R. 3590, The Patient Protection and Affordable Care Act." 111th Cong. (enacted). Section 3021. (http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf).
47 David M. Cutler, Karen Davis and Kristof Stremikis (2010). "The Impact of Health Reform on Health System Spending." Center for American Progress and The Commonwealth Fund, May 21. (www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2010/May/1405_Cutler_impact_hlt_reform_on_hlt_sys_spending_ib_v4.pdf)
48 Alliance for Health Reform (2008). "Health Information Technology: More Than the Money." October. (www.allhealth.org/publications/Health_information_technology/Health_Information_Technology_More__).
49 Kenneth Thorpe, Lydia Ogden and Katya Galactionova (2010). "Chronic Conditions Account For Rise In Medicare Spending From 1987 to 2006." Abstract, p. 718. (www.healthaffairs.org)
50 Thorpe, Kenneth; Howard, David; Galactionova, Katya (2007). "Differences in disease prevalence as a source of the U.S.-European health care spending gap." Health Affairs; 26(6): 678-86. (www.healthaffairs.org).
51 McCall, Nancy; Cromwell, Jerry; Urato, Carol; Rabiner, Donna (2008). "Evaluation of Phase I of the Medicare Health Support Pilot Program Under Traditional Fee-for-Service Medicare: 18-Month Interim Analysis." October. (www.cms.hhs.gov/reports/downloads/MHS_Second_Report_to_Congress_October_2008.pdf ).
52 Russell, Louise (2009). "Preventing Chronic Disease: An Important Investment, But Don’t Count on Cost Savings." Health Affairs, Jan./Feb. 28(1): 42-45. (www.healthaffairs.org).
53 Anne Martin, David Lassman, Lekha Whittle and others (2011). "Recession Contributes to Slowest Annual Rate of Increase in Health Spending in Five Decades." January, Exhibit 1.(www.healthaffairs.org)
54 Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team (2012). "Growth in US Health Spending Remained Slow In 2010." Health Affairs, 31, no. 1, Exhibit 2, p. 210. (www.healthaffairs.org)
55 Congressional Budget Office (2007). Letter to Sen. Ron Wyden. April 10. (www.cbo.gov/ftpdocs/79xx/doc7992/DrugPriceNegotiation.pdf ).
56 Lehman, B. The Pharmaceutical Industry and the Patent System . International Intellectual Property Institute (2003). (www.earth.columbia.edu/cgsd/documents/lehman.pdf ).
57 Office of Management and Budget. "Analytical Perspectives, Budget of the United State Government, Fiscal Year 2012." P. 243. (www.whitehouse.gov/omb/budget/Analytical_Perspectives)
58 Ginsburg, Paul B. (2008). "Don’t Break Out the Champagne: Continued Slowing Of Health Care Spending Growth Unlikely to Last." Health Affairs 27, no. 1, January/February, p. 30. (www.healthaffairs.org).