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Do You Really Mean Health Expenditures?



August 7th, 2012
by David Kindig

Using the term health expenditures yields a narrow and seriously misleading view of what it will really cost to improve population health.

I’ve been worried about this for some time, but most recently while reading the excellent and important new report on For the Public’s Health: Investing in a Healthier Future from the Institute of Medicine Committee on Public Health Strategies to Improve Health. This is the third of three reports in a series; it addresses the critical issue, in a time of budgetary austerity, of resource needs and realistic approaches to addressing them in a “predictable and sustainable manner to ensure a robust population health system.”

In their first Recommendation, the report authors advise that the

Secretary of the Department of Health and Human Services should adopt an interim explicit life expectancy target, establish data systems for a permanent health-adjusted life expectancy target, and establish a specific per capita health expenditure target to be achieved by 2030. Reaching these targets should engage all health system stakeholders in actions intended to achieve parity with averages among comparable nations on healthy life expectancy and per capita health expenditures.

These are bold and challenging targets, worthy of critical policy attention. But here is where precise terminology is critical for population health advocacy. Throughout the report the term health expenditure is repeatedly used, referring to what is reported by the CMS Actuary in the National Health Accounts, and what we commonly refer to when we calculate the percentage that health takes of the overall GDP.

However, national health accounts only report national expenditures for health care and governmental public health. Calling these health expenditures could subtly lead many to infer that health care and public health are the only or the main expenditures necessary to improve health. But in the IOM report’s words,

The United States seems to lag behind most high-income nations in the deployment of socially protective strategies that appear to correlate with better population health. Excessive allocation of national spending on medical care services poses major societal opportunity costs and restricts funding opportunities for other essential sectors such as education, energy, water, transportation, agriculture, and employment. For example, the rise of medical care costs, and the recent recession, has contributed to a decline in state appropriations for public higher education.

Some will understand this population health resource perspective, but the terminology will lead many, perhaps unconsciously, down the path that health care — and even the doubling of governmental public health expenditures that the report calls for — are all that it takes to produce health.  I would suggest ending the use of the term health expenditure; adopting the term population health expenditure for the total of all investments that will improve health; and using the longer and clumsier but more accurate term health care and public health expenditures for the numbers we currently get from the CMS actuary.

An accompanying explanation should note that evidence, data, and accounting systems do not yet exist to precisely estimate what proportions of non-health care and non-public health expenditures are health-outcome producing, but that this is a critical comparative effectiveness and health policy research priority for the future. The IOM report anticipated this need by also recommending the “development of a robust research infrastructure for establishing the effectiveness and value of public health and prevention strategies, including……the development and validation of methods for comparing the benefits and costs of alternative strategies to improve population health.” Drawing on cross-national evidence, the report mentions the recent work of Bradley et al, which argues that an important reason for the poor performance of the US health system is the relative proportion of non-health care social spending to health service spending; in other developed countries it is 2.0, while in the US it is 0.91.

While the term health care and public health expenditures is longer and more clumsy, it will constantly remind us that producing health and reducing disparities will require investments across all determinants, and it will prompt us to get on with new governance and business models that will allow us to accomplish this. If the Secretary does establish the IOM panel’s recommended targets, let’s hope that in the future they will indeed reflect the needed per capita population health expenditures across all determinants: medical care, public health, health behaviors, the social environment, and the physical environment.

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1 Response to “Do You Really Mean Health Expenditures?”

  1. Robert Bowman Says:

    Health spending and health access mapped geographically can help explain the strengths and limitations of health spending and various recovery plans.

    Health spending is most concentrated where physicians are concentrated. About 1100 Super Center zip codes averaging 1100 physicians per 100,000 represent only 1% of the land area but have 45% of physicians and over 50% of spending attributable to physicians. These are clustered together adjacent to one another and to Major Center zip codes with about 400 physicians per 100,000. Multiple times greater spending per capita in these top concentration zip codes is noted in office based primary care alone – the best distributed workforce. At a time when you cannot increase health spending, the only place for cuts is inside of concentrations where there is the most organized resistance to change developed over the past 100 years.

    Meanwhile 30,000 zip codes outside of concentrations of physicians have 65% of the population and only 25% of physicians. These are zip codes most dependent upon primary care and the family practice component of primary care. These zip codes also receive multiple times less health spending per person in office primary care and many approach zero in other types of health spending. For these 200 million Americans including 60% of the urban population, 70% of the rural population, over 65% of the elderly and all populations in most need of basic services, specific designs are needed for workforce and for support.

    Recovery of access is required to allow quality to begin for most Americans. Recovery of access requires spending upon health access in areas in need of health access. This has generally been accomplished with broader coverage of populations most likely to be found outside of concentrations and during times when primary care delivery costs were covered by the revenue resulting from primary care delivery. Only 1970 to 1980 has the nation focused upon access. Cost cutting designs have been the rule since 1980. Cost cutting fails when expenditures inside are heavily defended or increased, forcing cuts for those outside and limiting primary care. Failure by design is also annual primary care delivery costs forced to double digit annual increases or far beyond revenue received due to locums, recruitment, retention, HIT, electronics, maintenance, reorganization, certification, and technology costs.

    The need outside of concentrations where 200 million Americans reside is more spending per person (not prospective payment, managed care, SGR, shared savings, and shortage programs with small investments and smaller results).

    The specific recovery plan is more primary care result per primary care graduate (not shrinking from 18 to 7 Standard Primary Care Years per primary care graduate 1980 to the present). The need is more primary care delivery where needed per graduate. Training should result in as much permanent family practice as possible, not 16 – 25% employed family practice result from PA and NP or 7% result from MD graduates or 14% result from DO graduates. Family medicine with zero growth 1980 to 2012 remaining at 3000 annual graduates is an indicator of lack of focus upon the source with the most primary care delivery per graduate and the most delivery for the elderly, poor, near poor, rural, disadvantaged, and other populations in need of permanent broadest generalists.

    The US cannot recover health access when designs impacting most Americans are moving to less spending, less primary care delivery per graduate, and less primary care delivery per graduate outside of concentrations.

    Various innovations, reorganizations, digitalizations, and academizations are easily published and almost as easily funded, but fail to provide much hope for recovery for most Americans. Some actually can move the primary care result for the nation to lower primary care volume and worsening health access. This can result in quality deficits as the consequence of quality-focused interventions.

    Solutions that existed 100 years ago still work now and remain the most efficient route to recovery of health access when designs for spending and for workforce truly focus upon health access. Unfortunately these solutions are mainly seen by those outside of concentrations and are rarely experienced by those inside of concentrations, where spending focus is inside of concentrations and where permanent broadest generalists are lowest at less than 5% of local workforce.

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