Our health care system is changing forever

We have been inundated with pronouncements that the country’s health care expenditure is reaching the stratosphere; its tag price of 18 percent of the GDP and rising is shocking. But, while the USA spends the most health care dollars per capita, the WHO ranks the country as probably No. 37 of the world’s greatest health care systems. There have been relentless commentaries that this rising cost is unsustainable; that without “real reforms” we might as well solicit China to provide our future health needs.

Then, a surprising turn of events! The December issue of the New England Journal of Medicine, one of the most highly respected medical periodicals in the world, published a remarkable health policy report entitled “The Health Care Spending — A Giant Slain or Sleeping?” Among the surprising information, it declared that “real spending for health care increased a scant 0.8 percent per person in 2012.” Hurrah! It means that health care expenditures have ebbed. So are we returning to business as usual?

A year ago, I listened to a health care guru expound on the theory that “health care crisis” exists because health care expenditure is outpacing economic growth.

Today’s report implies that the slowing of health expenditures is partly because of the improving economy, but it is mostly due to “public and private efforts to control health spending and probably the Affordable Care Act (ACA) may be working after all.”

It is important to understand how health care has gotten expensive in order to understand the future implications of a “slowed health care cost.” The report points out that one of the major reasons for cost growth during the past 50 years has been the development and diffusion of new medical technology. It is estimated that about 50 percent annual increase in U.S. health care spending has resulted from new technology, which includes modern cardiac procedures, prescription drugs and other imaging technologies.

Changes in the health status of the population — such as, aging and trends in smoking and obesity — are frequently mentioned to drive health care cost upwards, but the report shows that their effects are modest.

However, a notable finding is that waste comprises about 30 percent of the health spending in the USA. The authors claim “patients receive too much care and that because of inadequate prevention, there is excessive use of acute care, and many prices are higher than necessary and most importantly administrative costs boost spending unnecessarily.”

This report ends with the predictable conclusion that even if the economy gets better, the pressure to keep health costs down will persist. It therefore behooves policy makers – both public and private – to develop strategies to allay the spiraling health care cost.

“The first of two strategies discussed involves reducing insurance benefits, increasing cost sharing by users of care, restricting eligibility for programs and cutting payments to providers.” This strategy is the most dreaded because this is nothing more than “rationing of care.”

Furthermore, the federal government believes that with the aging population, federal expenditure would outpace that of the private sector; so there is a move to adopt the second strategy which is to “reengineer health care delivery so that it would be more efficient and less wasteful;” waste, as already mentioned, comprise a third of the health care cost. According to this report, reengineering would include changing the method of paying providers by completely eliminating the current fee for service, in favor of cost sharing, and then educating consumers on how to make better choices and, finally, reducing administrative expenses.

The authors’ final words, “Regardless of what happens to cost trends, current spending is far higher than needed, and it demands continued efforts at cost control, including implementation of the new ACA provisions.” I hasten to add that the U.S. healthcare system is not going back; it is changing forever!

Reference: Health Care Spending — A Giant Slain or Sleeping?David Blumenthal, M.D., M.P.P., Kristof Stremikis, M.P.P., M.P.H., and David Cutler, Ph.D. Engl J Med 2013; 369:2551-2557December 26, 2013DOI: 10.1056/NEJMhpr1310415

Dr. Cabasares is a board certified general surgeon and Fellow of the American College of Surgeons; he practices in Perry.

HHJ News