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Health Care Spending: What’s In Store?


July 16th, 2013
by Arthur Kellermann

In the May issue of Health Affairs, two teams of Harvard researchers asserted that the recent slowdown in health care spending could be the beginning of a trend that will lead to decreased health care costs. Their optimism is sharply at odds with the bleaker assessments contained in a recent Kaiser Family Foundation analysis, a related commentary from KFF President Drew Altman, and an NEJM Perspective by Stanford University economist Victor Fuchs.

Resolving the question of whether or not the United States has finally gotten a handle on health care spending is vitally important, because the choices we make going forward will have profound implications for our economy, the financial wellbeing of millions of American families, and ultimately America’s standing in the world.

Whether steep growth of health spending resumes or not, the amount of money we already devote to health care is so huge — roughly $2.8 trillion per year — that it is crowding out other national and state priorities. In addition to fueling our national debt, the last 12 years of spending growth wiped out the income gains of middle class families. If health care had grown at the same rate as the consumer price index, a typical middle class family of four would have had an extra $6,000 to spend in 2011 alone. But because this income was consumed by our health care, it was not available for other family priorities such as housing, education, and child care.

The spending predictions reported to date are so divergent that it seems who is reading the tea leaves matters as much as the pattern left on the bottom of the cup. But regardless of which view you favor, it is likely that the ultimate trajectory will be determined by four forces that are moving inexorably, like tectonic plates, to shape the future landscape of American health care.

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Saving Grady: Reflections On Kate Neuhausen’s Narrative Matters Essay


June 10th, 2013
by Arthur Kellermann

In the past 12 years, several of our nation’s most storied public hospitals have closed, including DC General (2001), New Orleans’s Charity Hospital (2005), and Martin Luther King, Jr. hospital in Los Angeles (2007). When Atlanta’s Grady Memorial Hospital was featured on the front page of The New York Times on Jan 8, 2008, it was widely assumed it would be the next to go. However, at its darkest hour, Grady received help from an unexpected quarter.

In the June issue of Health Affairs, a young physician, Dr. Kate Neuhausen, describes how she and other leaders of a little-known student organization mobilized hundreds of health professions students from around the state of Georgia to join the fight for Grady’s survival. It is difficult to overstate how perilous the hospital’s situation was at the time. Because Grady provides such a disproportionate share of uncompensated care in the state of Georgia, it would have been impossible for metro Atlanta’s hospitals and private health care providers to absorb the sudden loss of more than 900 inpatient beds; the highly specialized trauma, burn and psychiatric services Grady provides; or the displacement of tens of thousands of inpatient days and hundreds of thousands of outpatient visits. The resulting social, medical and financial upheaval would have sent shockwaves throughout the region—the economic engine for the state and a vital financial, commercial and transportation hub for the Southeastern United States.

Fortunately, Atlanta’s business community and philanthropies grasped the gravity of the situation. So did Georgia’s governor, the leaders of Georgia’s General Assembly, the Commissioners of Fulton and DeKalb Counties, the appointed members of the Hospital Authority that ran Grady, the leadership of Emory University and Morehouse School of Medicine (which provides the hospital’s medical staff), Grady’s employees, and its patients. But each group had a different concept of what needed to be done. Urban-rural, partisan and racial politics came into play. Time was running out.

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A Health Care Entitlement Worth Ending


February 27th, 2013
by Arthur Kellermann

The “fiscal cliff” deal raised taxes on households earning more than $450,000 a year and sheltered everyone else from an automatic income tax increase. Tough decisions about spending were put off until March 1, the new deadline by which Congress must take deficit-cutting action if it is to avoid automatic across-the-board sequestration cuts.

As both sides return to the negotiating table, one of the biggest bones of contention is what to do about entitlement spending, particularly Medicare. Many Republicans want to raise the age of Medicare eligibility to 67. President Obama and congressional Democrats do not.

It will be difficult, if not impossible to meet a reasonable fiscal target without addressing federal health care spending. However, the current fight is misplaced. The health care “entitlement” we need to reform is the notion that America’s health care system is entitled to an ever-growing share of America’s wealth.

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Health Care Cost Growth Is Hurting Middle-Class Families


January 3rd, 2013
 
by Arthur Kellermann and David Auerbach

In the September, 2011 issue of Health Affairs, we examined the impact of a decade of health care cost growth on the income of a typical, median-income family of four with employer-sponsored health insurance. To recap, between 1999 and 2009, the middle-class family’s nominal monthly income increased by $1,910. But after factoring in the rise of consumer prices and a near-doubling of health care spending (due to rising insurance premiums, growth in out-of-pocket health care spending, and taxes to support government spending on health care ), the family had little left over.

Their financial position would have been even worse if deficit spending, which did not exist in 1999, had not grown dramatically over the decade. If federal taxes had simply been increased enough to pay for growth of government spending on health care (ignoring all other deficit spending), the family would have ended 2009 with $290 less per month to spend than they had in 1999.

In the two years since we concluded this analysis, the situation has grown worse for the middle class. In 2010 and 2011, our median-income family’s out-of-pocket spending and tax burden devoted to health care didn’t grow much (due respectively to the effects of the recession and historically low growth in Medicare spending), but the cost of their employer-sponsored health insurance increased by almost 10 percent, from $13,770 in 2009 to $15,073 in 2011. (It grew another 4 percent in 2012.) So although their total monthly compensation grew modestly – about $170 per month – their employer held back an additional $57 per month to cover its share of the rising premium, and the family had to chip in another $51 per month to cover the rest. This left them with only $62 more per month, or roughly $14 per week, to address the rising costs of other goods and services.

Thus, two-thirds of our family’s modest income gain was consumed by rising health care costs. Little was left for anything

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Responding To Newtown


December 21st, 2012
by Arthur Kellermann

The horrific massacre of 27 children and adults in Newtown, Connecticut ranks second only to Virginia Tech among U.S. mass shootings. These tragedies are part of a lengthening list of mass killings in such varied places as a shopping mall, a movie theater, a Sikh Temple, a high school, a congressional constituent meeting, and a military base. But this one was different. Not only were the death toll particularly high and the killings particularly savage; the killer’s victims were first-grade students, teachers and school staff.

Millions are deeply touched by this tragedy, but few of us can fathom the shock and grief felt by the survivors, parents, family members and friends of those who died. Our first concern must be to comfort them and support what will likely be a long and difficult recovery. But few people are prepared to stop with that. This event, unlike its predecessors, has sparked a movement to challenge the inevitability of mass shootings, not to mention the thousands of individual gun homicides that occur each year in the United States.

In response, President Obama has signaled his intention to submit legislation to the Congress by end of January. To prepare for this action, he is convening an Administrative task force, led by Vice President Biden, to craft a package of proposals. What this panel recommends, and how the public reacts over the next few weeks, could be decisive in determining what will come from this terrible tragedy.

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