Restructure Medicare & Medicaid: Isolate and Address the Key Drivers of Rising Healthcare Costs USA Total Healthcare Spending Has Risen Faster than Peers’ (France, UK and Japan)* Total Healthcare Spending as % of GDP 1970 ; a i 5% 11% SS] LAZ7 fy) AAS 3% 8% Note: *Ranked by total healthcare spending in 2007; 1970 comparable data not available for Germany because of reunification. Source: OECD, U.S. Department of Health & Human Services, Kaiser Family Foundation. (@E) www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 279 Restructure Medicare & Medicaid: Incentives Support Healthcare Cost Growth ¢ Consumers demand healthcare services with less regard for the full economic impact as they pay only a fraction of the true cost out of pocket. ¢ Healthcare service providers are generally rewarded for pushing more services through the system, largely with relatively less regard for cost effectiveness. Bottom line = Powerful forces encourage spending related to social / economic / legal issues throughout the healthcare system. KP Source: Doug Simpson, Morgan Stanley Healthcare Research. a USA Inc. | What Might a Turnaround Expert Consider? 280 HOUSE_OVERSIGHT_020981