The Economics of Health Care - Week 1

Video 1: History Providers

To understand the Affordable Care Act, health care reform, and how it's going to transform our
system, we need to understand the health care system and how we got here, and the structure
and where it came from.

To do that, we go back to the 19th century. At that time, doctors were disreputable. They were
snake oil salesmen. They were very low prestige. Similarly, hospitals were places called the sinks
of human history. They were places that only the poor one, they were places for death, they were
not the places of hope and cure. They were long wards, infections were rampant, surgeries were
dirty, and people usually got infected and died from them. Doctors like the practice at hospitals
because they got some experience, they also got prestige by having admitting privileges, but they
cared for the middle class and the upper class in their home. Things began to change in the latter
part of the 19th century, mainly due to three changes in science.

 The first big change was anesthesia and painless surgery. In 1846, the famous surgeon
John Warren at the Massachusetts General Hospital showed that you can desensitize a
patient and operate without pain. A huge development occurred in painless operations.

 Then, there was the germ theory of disease discovered by Koch in Germany and Pasteur in
France. That combined with Lord Lister's antiseptic surgical techniques and then a septic
surgical techniques made surgery much safer and caused less infection.

 Finally, in 1895 x-rays were discovered, and the use of x-rays to peer inside the body and
see bones was pioneered. This meant that the hospital became a much safer place to go, a
place that actually provided real therapy to people not just moralizing. You could get a
safe operation. Operations expanded and fewer people died of infections.
 Simultaneously, there was a reform of medical education led by the American Medical
Association and then the Carnegie Foundation. The Flexner Report was produced in 1910.
Abraham Flexner went around to all 155 medical schools around the United States and
Canada and assess them. He made a major recommendation that transformed medical
education. First, that students should have college training in sciences. Second, that
medical education ought to be divided into two years of pre-clinical work and two years of
clinical work in a hospital. Third, that medical schools should be affiliated with universities
and have full time university professors instead of private practitioners just making
money. That had a very big effect on doctors. First, it decrease the number of poor
students who became doctors and the number of students from rural areas because they
could not afford eight years of education before they began earning an income. But it also
dramatically increased the quality of doctors and they became much more
professionalized.

Through the 1930s, there was an expansion of hospitals and the quality of care improved.
After World War II, two big changes further fueled the expansion of hospitals and the
specialization of doctors. One, was the Hill Burton Act passed in 1946. Senator Lister Hill was a
Democrat of Alabama and Harold Burton was a Republican of Ohio. This bill provided federal
funds to support the building of community hospitals. Federal government through the Hill
Burton Act actually paid for about a third of all hospital expansion in the 40s, 50s and early
60s. There were some provisions to the bill, some of which were not enforced. There were to
be no discrimination based upon race, religion or national origin. There were supposed to be
minimum requirements of uncompensated care for people who didn't have insurance and the
emergency rooms were supposed to be open to all. But, there was very little accountability on
these provisions. Importantly, the federal government gave a lot of money to states to build
more hospitals.

The second big change, was funding of the National Institutes of Health, an expansion of
biomedical research in this country and the triumph of trying to discover new cures and
therapies. This led to a sequence of discovery. In the 1950s, real breakthroughs in various
areas. In the early 1960s then these breakthroughs became treatments at elite academic
hospitals. In the 1970s and 80s, they spread around the country to community hospitals.

So, just take one example, organ transplantation, the first successful organ transplantation
between twins occurred in 1954 at the Brigham and Women's Hospital in Boston. A lot of
experimentation, organ transplantation proliferated and then became standard of care in the
1970s. Similarly the intensive care unit founded in 1955, then proliferates especially when you
can do cardiac monitoring in them, you can do cardiac catheterization to see what's happening
in the heart, that expands at academic centers in the 60s and then goes out to most
community and other hospitals in the 1970s and 80s.

And the same pattern happens with cancer chemotherapy. The first successful
chemotherapies begin to be developed in the late 1950s, cures of childhood leukemia and
Hodgkin's disease in the early 1960s. The development of more treatments by the late 1970s.
Breast cancer can be cured. Testicular cancer can be cured. And these therapies can be
delivered in many many community hospitals.

A further change is Medicare, created in 1965. It pays hospitals very generously because the
government did not want hospitals to resist taking patients on Medicare. So not only do they
get payment, they also get some money for expanding their facilities. This encourages
hospitals to expand and to add new wings and to add new equipment. The result is that
through the decades, hospital payment increases and the proportion of the health care dollar
going to hospitals skyrockets like a hockey stick.

And you can see it starts out low and then really rises over time as more technologies are
developed, hospitals expand to use the technologies and through the 70s and 80s they
expand. Doctors go into more specialist care and there are a variety of reasons for this. One of
them, is in World War II, the Army actually gives specialists a higher rank.

After the war the VA, the Veterans Administration, also give specialist higher pay. And so, this
encourages them. The National Institutes of Health provide research funds for specialists and
training grants to create more specialists in this country, and as specialists get trained in a few
elite hospitals and medical centers, they begin to go out to the community hospitals looking
for positions and to other academic centers, and you get a proliferation of specialists.

In addition, specialists are paid more not just by the Veterans Administration, but health
insurance pays more for procedures, so surgeons and cardiologists and radiologists doing
procedures get higher reimbursement. And this again incentivizes doctors to go into specialist
training. The result is that the United States has more specialists than almost any other
country and fewer primary care doctors.

The whole transformation took hospitals from the sinks of human life, doctors from snake oil
salesmen, to really being able to provide therapies in the early part of the 20th century. And
then after World War II, a huge expansion of hospitals and specialized doctors providing care
in and across America. Next, we're going to look at the history of how we pay for health care.
 The history of private health insurance as well as the history of Medicare, Medicaid and other
government funded programs.

Video 2: Insurers

To understand the structure of American health insurance, we also need to go back to the 19th
century. It was then that in remote rural locations, employers began to offer their workers
coverage. Loggers out in the woods of the Northwest, miners in various rural areas got their health
insurance from their employer. And then in the early part of the 20th century, the Depression
forced a real change. Because of the Depression, lots of Americans were not able to afford
healthcare. Use of the hospital went down. In 1929, Baylor University in Dallas Texas offered
teachers a deal. They would provide 21 days of hospital care per year for a six dollar premium.
Many people date the founding of health insurance in America to this action by Baylor. Many
people considered the Baylor experiment in Dallas, the birth of health insurance in America. The
idea quickly spread to other cities and other hospitals across the country. Actually, many hospitals
in the city would combine and offer an insurance product, so the individual patient could decide
and choose between the hospitals. This idea led, in 1939, to the creation of Blue Cross. They were
tax exempt insurance plans based at the state level. The states actually provided them an
advantage in that they didn't require financial reserves because the insurance plan would
guarantee service at a hospital. And in return, the Blue Cross plans community rated. They charge
everyone, regardless of their health condition or their age, the same price. Health insurance then
proliferated because commercial insurance got into the game. They had traditionally avoided
health insurance for a variety of reasons. The first is, they were worried that only the sick would
buy. The second is, they could not figure out how to define health and how to define sickness in a
way that would make sense and would not open them up the fraud. Blue Cross plans showed the
way. In addition, the commercial or for-profit insurance companies had several advantages. First,
they could offer one stop shopping to an employer. They could package health insurance with life
insurance and other products. Second, they weren't tied to a particular state or geography. They
could give it national coverage to big companies. And most importantly, they did not community
rate. They offered lower prices to employers that had healthy, low risk workers. And this created a
tension between the commercial for-profit insurers and the not for-profit Blue Cross plans. A third
way of getting private insurance was managed care organizations like Kaiser. Henry Kaiser was an
industrialist who made ships and steel out on the West Coast for the United States during the war.
And in 1942, he set up a health insurance plan for his workers. The plan actually provided
comprehensive healthcare services to all the employees. Actually, Kaiser health plans owned its
own physicians, employed them, and actually owned its own hospitals. So they provided
comprehensive managed care for its workers. Doctors were very suspicious of all of this insurance.
And actually, when Blue Cross started, doctors resisted. But several things made them change
their mind. The first and most important was the Depression and a decrease in their income.
Second, the commercial insurers came in and they packaged payment to the hospital with
payment to the doctors who worked in the hospital such as surgeons. And this made the doctors
worried that they would be cut out. Finally, doctors had figured out a way, so that the insurer
would not become between the doctor and the patient, that the payment would go directly to the
patient, who would then pay the doctor. So, physicians, through their state medical societies,
came up with Blue Shield plans, and this physicians control those plans. Over the 1940s and 50s,
health insurance became much more important for two reasons. First, healthcare costs were
rising. With greater use of hospitals, the more things hospitals could do, cost at hospitals became
more important. Second, as we mention, the tax exclusion encouraged employers to provide
health insurance to their workers. In 1942, the wage and price controls were set in place, but the
government ruled that employers could provide health insurance to their workers equal to five
percent of wages and it not be considered a violation of the wage limit. Employers began using
health insurance to attract more workers. Employer sponsored coverage, then got a big boost in
1954 when Congress rule that health insurance was not to be considered part of income for
determining taxes. In this way, it became advantageous for employers to give their workers health
insurance because they would not be taxed on that health insurance and so, it became a very
valuable fringe benefit. If health insurance is tied to your employer, who gets left out of that
system? Next, we're going to look at public payment for healthcare and covering all those people
not covered by employer-sponsored health insurance.

Video 3: Government Programs

With employers providing most of health insurance in the country, there are two groups that are
predominantly left out, the poor and unemployed who don't have an employer and the elderly
who have stopped working. In 1960, 35 percent of the elderly were living in poverty
predominantly because of high healthcare costs without insurance. This became a major issue.
And in 1957, Representative Forand of Rhode Island introduced the first Medicare bill. His idea
was to tie Medicare and payment of coverage for the elderly to Social Security and pay for through
payroll taxes. Not much happened. Although, how to provide healthcare insurance to the poor and
elderly was a major issue in the 1960 election between John F. Kennedy and Richard Nixon, but
not much happened after Kennedy got elected. In the early 1960s, Congress passed a compromise
water down bill called Elder Care, which allowed the states to voluntarily get federal funds to
provide health coverage for the poor and elderly. Few states did it, and it was widely viewed as a
failure. In 1964, Lyndon Johnson swept into the White House with a huge landslide victory. He got
more than 60 percent of the vote. And he began introducing major transformational legislation,
the civil rights legislation, education legislation, immigration and health care. Collectively, they
became the Great Society program. Within seven months of his coming into office, July 30, 1965,
he signed legislation for Medicare and Medicaid in Independence Missouri right near Harry
Truman. Medicare was a program set up to provide coverage to the elderly, those people over 65.
Medicaid was a state and federal combined program paid for largely by the federal government
and administered by states to provide care to the poor and to disabled people. And that was the
structure. Employer sponsored coverage for people of working age, Medicare for the elderly,
Medicaid for the poor. That was the main bulk of how we paid for healthcare. But there were
other government programs. There is Veterans Administration program to pay for healthcare for
vets. There's Tricare which pays for healthcare for Defense Department and soldiers and their
dependents. There's the Indian Health Service that pays for the healthcare of native Americans.
And there are other programs such as the Federal Employee Health Benefits Program that pays for
federal workers. The result is a very complex system of how we pay for healthcare and the care
delivered by various different people; doctors, hospitals, home healthcare agencies, and all the
others; the drug companies, the device manufacturers and others who provide the services and
the goods in the system. We have a very complicated system. Next, we're going to look at how we
actually pay for healthcare, how insurance companies, Medicare and Medicaid, actually pay
doctors and hospitals to provide care.

Video 4: Introduction to Health Insurance

We have a remarkably complex healthcare system in the United States, many different payers:
private payers, governmental payers, many different providers of care: hospitals, doctors,
pharmacies, skilled nursing facilities, home healthcare agencies, a number of manufacturers of
drugs and devices. It is a very complex system. We're going to talk about insurance and paying for
healthcare now. There are a number of different kinds of insurance: health insurance, car
insurance, house insurance. Why do we have insurance in the first place? There are really three
main reasons to have insurance. The first is to protect people against large financial losses, large
random losses. If God forbid you had an appendicitis or got hit by a bus, it would cost a lot of
money, and appendicitis could cost you $50,000 for the operation, a few tests, and a couple of
days in the hospital to recover. Most American families cannot afford to pay $50,000 out of their
pocket at one fell swoop in an unexpected moment. And so to protect against that, insurance
comes in. You pay a small amount every month or every year for the large payout if God forbid
something bad happens. So one purpose of insurance is to protect against large financial losses. A
second purpose of insurance is to reduce the barrier to people using services. If you have to pay to
go to the doctor, pay to fill a prescription, pay to get a particular test, you might think too much
and you might not do those things. You might not take your medicine. You might not get a
colonoscopy to prevent you from getting colon cancer. Insurance pays for those health care
services reducing the financial barrier to actually getting the necessary healthcare. And the third
goal of health insurance is to pool risk. Any individual person it's uncertain whether they're gonna
get sick or not. A good analogy is to take a dice. If you roll a dice, who knows you might get the six,
you might get one, you might get a five and the single roll is very uncertain what it will come up.
But if you roll a dice enough times, it will average out to 3.5 over time, that's because over a large
number, the average holds. The same thing actually happens in healthcare. If you take a variety of
people, if you have a small number of people the chance that some person will get sick
unpredictable and high. On the other hand, once you have a large number of people, it becomes
very predictable how many people will get sick, how much health care services they'll need.
Pooling works by bringing large numbers of people together, so that you can predict the use of
health care services and make the health insurance amount needed much more predictable. These
benefits of health insurance come with two problems. The first problem is called adverse
selection. If you allow people to voluntarily decide whether they're going to buy insurance or not
insurance, we know that people who are sick or who have a high likelihood of getting sick are
more likely to buy health insurance. That has a problem. If only the sick buy insurance, then you
increase the price as you increase the price that people who are less sick but who were buying
insurance will stop buying insurance and you will concentrate the number of people buying
insurance who are very sick. This has what's called a death spiral effect. More people who are sick
in an insurance plan increases the cost, the well stop buying, super concentrating the sick and the
prices go up leading to a problem that no one can afford the coverage. That is the problem of
adverse selection. It's inherent in any voluntary system for buying health insurance. A second
problem is called moral hazard. By providing people with insurance, you're actually reducing the
price they see. If I go to the doctor and I need a test, insurance lowers the price of that test. The
result is moral hazard. I tend to use more expensive tests and I tend to use more healthcare, when
I don't see the real cost of the services I see at a lower cost. Well, insurance companies have
developed a lot of approaches to counteract the problem of moral hazard. The first one is
obviously premium. They charge you a lot for the insurance. The second is a deductible, that is,
you have to pay say the first $250 or $500 of your health bill before the insurance kicks in and
covers the other parts. That deductible makes you cautious about using a lot of services. Similarly,
every time you go to the doctor, or every time you fill a prescription, there could be a copay, that
is a set amount that you pay for going to the doctor say $20 for a doctor visit or $5 to get a
prescription filled. That is a copay each time you use a service. Coinsurance is like a copay, but it's
a fixed percentage. So say you go into the hospital and you have a 20 percent coinsurance, you're
responsible for 20 percent of the hospital bill. Out-of-pocket expenses are all of those combined.
They're the premium, with the deductible, with the copay and coinsurance. They're how much you
need to spend out-of-pocket in total. Sometimes people call out-of-pocket expenses skin in the
game. We have to increase the amount of skin in the game that people have that means we have
to increase the amount that they have to pay for health insurance out of their own pocket. With
that introduction to health insurance, next we're going to look at how people get health coverage
through private insurance and a variety of governmental programs.

Video 5: The Structure of Health Insurance

Well, with that introduction to health insurance, here's how it breaks down in the United States.
There's about 310 million people in the country. About 50 million, a little less than 50 million of
them don't have insurance. And doesn't mean they don't get health care services, doesn't mean
they don't go to the doctor, or don't need a hospital, it just means that they don't have health
insurance to pay for it. That leaves about 260 million Americans who have health insurance. Now,
that's broken down into two large groups. One large group is people who have private insurance
and that is they get insurance through a company, another is people who get public coverage
through the government and government programs. When we consider the private insurance side,
they are further broken down into two groups. The first and by far the largest group of about 150
million Americans gets health insurance through employers. Either they're the worker or they're
the family of a worker. The benefit of employer sponsored insurance or ESI is that company pulls
all the workers. So in a company have the law of large numbers. Now that means that large
employers have a big advantage because they have more workers, more predictable health care
costs, more likely to have some sick people and some healthy people. Small employers are the
small group market. Actually is much more unpredictable. If you have only nine or 10 employees in
a insurance plan, who knows who's going to get sick? Who knows when they're going to get sick?
It's much more unpredictable and typically insurance companies build in a risk premium. They
charge more because of that unpredictability. About 15 or 16 million Americans buy their private
insurance themselves. They actually contract with an insurance company themselves to get health
coverage. They are subject to the law of one number. There's a small group, an individual market
and they are typically what's called experience rated. They pay based upon whether they're
healthy or sick. Healthy people pay less, sick people pay a lot more or don't even get insurance
because they're too high a risk for the insurance company. This is a very volatile market and it's
not easy to get insurance in this market, and often you don't get very good insurance. In addition
to the private insurance side I mentioned there's also the public insurance side which we'll talk
about next. On the private insurance side there are large numbers of both for profit and not for
profit insurance companies. There are the Blue Cross and Blue Shield plans. Many are state based
and they typically are not for profit plans. And then there are big for profit commercial insurance
which covers the majority of the people in the employer sponsored market. UnitedHealthcare,
WellPoint, Aetna, Cigna, Humana. These for profit companies take a premium and have three
components of how they spend the money. The largest component is paying for medical services
or medical bills. There's also a component for the administrative costs, the paperwork associated
with paying the bills. The pre-authorization to make sure that a person really needs a test that has
been ordered and other elements of administration. In addition, they have to have a profit at the
top. Even if they are not for profit they have to have a margin to reinvest in the company. Now,
the medical loss ratio or MLR is the amount that an insurance company pays for medical services.
Why is it called a loss ratio? Well, that's because it's from the perspective of the business or the
investors in a for profit company. Every payment of a medical bill is a loss of profit. Medical loss
ratio is typically a higher one, means that more of the premium goes to medical services, a lower
one means less of the premium goes to medical services and more goes to profit. It's not clear
how much is the right MLR, but a lot of people think that for big employers an insurance company
should pay out at least 85 cents of every premium dollar for medical services or have an MLR of
85. And you can see here the various different medical expenses by the big insurance companies.
Health insurance in the United States is not cheap, it actually cost a lot of money. Last year the
average premium for a family health insurance plan was $16,000. And the worker contributed out
of pocket an average of $4,000 for that health insurance plan or about 25 percent, with 75 percent
being contributed through the employer. That's 75 percent remember contributed by the
employer is not taxed as income or on the payroll for the worker. And that's one of the advantages
when an employer pays the full amount. You can see that the health insurance system is very
complex and very expensive. Next, we're going to talk about the public health insurance program.
Medicare, Medicaid, and the variety of other public programs to cover health care costs for
different groups in America.

Video 6: Medicare

As we've seen the United States has an incredibly complex private insurance market. There are
not-for-profit insurers like Blue Cross and Blue Shield. They are for-profit insurers like Humana and
Aetna. They sell to individuals, about 60 million individuals who buy insurance on their own. But
predominantly they sell to employers and cover workers at employers or what's called the group
market. That's an incredibly complex system. It's matched by an incredibly complex governmental
financing system for healthcare. At the federal level we have Medicare and Medicaid. We also
have Veterans Administration covering vets, Tricare covering military personnel. Let's start with
Medicare. Medicare was passed in 1965, and enrolled its first people in 1966. Originally, it was
composed of two parts, part A and Part B. Part A was to cover hospital care services, and it was
modeled on social security. It was paid for through payroll taxes. Some of the money coming from
the employer, some of the money coming from the worker. And it paid the hospital bill. Part B was
to pay for physician services as well as some other services; x-rays, lab test, ambulance, as well as
some specialized things like cancer chemotherapy drugs and physical therapy. Part B is not paid
through payroll tax. It's paid through premium that the individual Medicare beneficiary pays about
25% of the costs, and 75% of the cost comes from general tax revenue. That system worked fine it
was called Medicare Fee for Service. Then in 1997, Medicare added Part C or what's called
Medicare Advantage. It's a managed care kind of program. Private insurance companies advertise
to elderly people and if they want it they sign up. The private insurance companies have to provide
all the services covered in part A and B, and they can cover additional services like drugs and other
services. But they are responsible for all of the care of the elderly. In 2006 under President Bush,
Part D or the drug benefit for Medicare was enacted. Again this is a voluntary program the elderly
can opt-in. If they do they have to pay a premium that covers about 25% of the cost, but the
general tax revenue covers the other 75% of costs. And about 30 million of the 50 million people in
Medicare take Part D. In addition to all the government programs, there's Medigap which is a
private program to fill in the holes of Medicare. It's a way that the elderly can buy insurance to pay
for deductibles, coinsurance and other copayment programs. It's been reorganized into 12 distinct
types of insurance products that the elderly can buy. Medicare was started in 1966. There were
about 19 million people. Over the years it's grown tremendously so that today there's about 52
million people enrolled. Most of them, the vast majority of them are the elderly people at 65, but
some of them are non-elderly disabled. One large group of that are patients who have end-stage
renal disease or ESRD. Medicare pays for their dialysis or their kidney transplant. Another much
smaller group are people who have Amyotrophic Lateral Sclerosis (ALS) or Lou Gehrig's disease,
and again they get Medicare beneficiaries and some non-elderly people who are disabled also get
Medicare benefits. In addition to paying for hospital, doctor care, and drugs, there are some other
add-on payments that Medicare gives so that the government can support what it considers
worthy programs. Let's just highlight three of them. One of them is called Graduate Medical
Education or GME. This is payments to hospitals to train interns and residents, future doctors of
America. And the federal government spends about $10 billion paying hospitals to train them.
Disproportionate Share Hospitals or more commonly known as DSH payments are payments from
the federal government to hospitals who care for the uninsured to compensate them for the free
care they give uninsured people. That comes to about $11 billion a year. And then Critical Access
Hospitals is another federal program supporting small hospitals those with fewer than 25 beds in
rural areas that provide emergency services to rural residents. That comes to about $8.5 billion a
year. That's Medicare, the program for people who are 65 years and older. Next, we're going to
talk about Medicaid, how poor people get their health coverage through the government.

Video 7: Medicaid and other government programs

Last time we looked at Medicare, that gives health coverage to people who are 65 years and older.
Now we're going to look at Medicaid, the government program that gives health coverage to
people who are poor. Medicaid passed at the same time was predominantly targeted to the poor
people. Today, about half of the people would get Medicaid, our children, another quarter our
pregnant women and parents of the children and a quarter our elderly and disabled. Poor elderly
people in Medicaid pays for those provisions that Medicare doesn't cover. It turns out while a
quarter of the people are elderly and disabled, they actually use almost two-thirds of all the
Medicaid dollars. The Medicaid dollars predominantly don't flow to children and adults, but to the
disabled and elderly. Despite being a program to pay for healthcare for poor, it turns out that
there are certain groups which are very largely excluded from Medicaid. Working parents, only
some of them get covered on Medicaid even if they're poor. Turns out that if you're a childless
adult and destitute, you are not eligible for Medicaid. You are left out of the health care system if
you have no children and you aren't poor. It's important to contrast Medicare and Medicaid. While
they were part at the same time, they are very different programs. In Medicare, once you turn 65,

you get the program. You don't have to file papers, there are no complex eligibility requirements.
In addition, it's exclusively a federal program. The same rules apply throughout the United States
for everyone on the program. On the other hand, Medicaid is a very different arrangement. It's
conditional, you have to prove you're eligible. Not everyone who's poor is eligible. Second, it's a
joint federal-state program in two senses. It's funded jointly between the federal government and
the state. Federal government pays on average 57% of the cost, it pays more for poor states and
less to richer state and states pick up the rest. It's also a joint federal and state administrative
program. The federal government sets mínimum eligibility criteria, minimum criteria for what
needs to be covered, and then the states make the final eligibility determination, and what's
covered, and how it's administered. In addition to Medicare and Medicaid, the federal
government has a program called CHIP, Children's Health Insurance Program. After President
Clinton's healthcare reform plan was defeated, he teamed up with Senator Kennedy and passed
CHIP in 1997. It was meant to fill in a gap, provide coverage for children who were ineligible for
Medicaid, cover those children that were uninsured. Again, like Medicaid states set the eligibility
criteria, like Medicaid, its a joint federal- state finance program. Today about 6 million children get
CHIP and it costs about $13 billion. One of the consequences of our complex system is that White
and Asian children tend to be insured through private healthcare insurance. Whereas minority,
Hispanic and Black children, are predominantly covered by public programs, Medicaid and CHIP. In
addition to Medicaid and Medicare, there are a number of other large public programs. For
example,Veterans Affairs covers veterans. There are about 150 veteran hospitals in the country.
There are about 800 veteran outpatient facilities. This is a program which the federal government
both owns the hospitals, employs the doctors. It is true socialized medicine. And it cost about $53
billion per year. The Defense Department has strike year which provides services to about 9
million active military personnel, retirees and their dependents. There is the Indian health service
which provides services to the native American populations. And there are a few other programs
around, between the private insurance market covering employees and individuals who bribe
private insurance. The Public Health Insurance Programs, Medicare and Medicaid, veterans
programs and others. We have a very complex way of funding health insurance. That is matched
by a complex way of providing coverage between doctors, hospitals, pharmacies, home health
care agencies, and others.