Blog Home

Archive for the 'Innovation' Category




Connected Health Opportunities For Medicaid’s Most Vulnerable Patients


April 22nd, 2014
by Rachel Davis

The February issue of Health Affairs features a series of articles on connected health and highlights the potential for telehealth and telemedicine to reshape how health care is delivered, consumed, tracked, and even paid for.

With funding support from Kaiser Permanente Community Benefit, the Center for Health Care Strategies (CHCS) recently conducted a series of focus groups that showed how one key Medicaid population — medically and socially complex, low-income individuals — stands to gain from these advances.

The four focus groups were designed to better understand the issues driving these individuals’ health care utilization, their current level of comfort with technology, and how technology might be able to help them better manage their challenges. Participants were actively receiving services from of one of four case management/care coordination programs in New York City, Long Island, the Hudson Valley, and Philadelphia, and all were Medicaid beneficiaries with multiple medical and/or behavioral health conditions.

According to a recent Health Affairs article by John Billings and Maria Raven, these individuals frequent emergency departments and have a high incidence of chronic disease. They typically have chaotic, unstable, and socially isolated lives, and many lack permanent housing, live on the street, or in homeless shelters.

Read the rest of this entry »

Return Of The Repressed: Spending Growth Is Back, But What To Do?


April 21st, 2014
by Rob Cunningham

The sheer magnitude of the Affordable Care Act and its implementation seems to have briefly preempted the attention of the health policy community, distracting it from its perennial and inescapable preoccupation with spending growth. Everyone knew, of course, that when the dust settled, access and insurance market reforms would set off in ever starker relief the menace of the spending dragon. But in the meantime, an eerie 4-year lull in growth seemed to dull the edge of the problem.

There was research suggesting that structural changes, some in anticipation of payment and delivery system reforms encouraged by the ACA, might continue to restrain growth as the health economy joined a recovery from recession. This hopeful scenario got a boost as the lull outlasted a return to improved GDP growth. Flagging growth in pharmaceutical spending and unexpectedly low premiums in many state and federal insurance exchanges were other favorable straws in the wind. Could a generation-long growth trend averaging nearly two-and-a-half points above GDP finally be at an end? Some saw cause for cautious optimism.

This month, however, the Michigan-based Altarum Institute released an analysis based on government data that showed health spending growth began to surge last October, when it reached a 5-percent annual rate, and has continued to accelerate to a 6.7 percent pace in February, 2.4 percent above GDP and a 7-year high. Growth over the fourth quarter of 2013 was 5.6 percent, a 10-year high.

Read the rest of this entry »

Four Years Into A Commercial ACO For CalPERS: Substantial Savings And Lessons Learned


April 17th, 2014
 
by Glenn Melnick and Lois Green

Editor’s note: In addition to Glenn Melnick, this post is coauthored by Lois Green.

Background: In a very short period of time, Accountable Care Organizations (ACOs) have become an important and widespread part of the US health care landscape. A recent Health Affairs Blog post estimates the total number of public (Medicare) and private ACOs at more than 600 nationally, covering more than 18 million insured population. Despite their rapid and widespread adoption, relatively little is known about how ACOs actually work and how successful they have been. This is due in part to their relative “newness,” as many reported ACOs are just getting up and running. Others have been operational for short periods of time and have yet to produce meaningful or long-term sustainable results.

This Health Affairs Blog post helps fill some of this void by reporting on the operational experiences of one of the oldest (4+ years) and largest commercial ACOs in the nation. A previous Health Affairs Blog post reported on its initial planning and start-up phase, and a subsequent Health Affairs article reported on its early financial results.

In 2007, Blue Shield of California, along with provider and employer partner organizations, began exploring development of one of the first ACO-like programs in the country to serve Commercial patients. It launched in 2010 and, as reported below, has been generating savings to consumers throughout the period. Located in the competitive Sacramento market of northern California, the ACO is an example of an innovative shared savings model involving a large insurer—Blue Shield of California; a purchaser—the California Public Employees Retirement System (CalPERS); a physician group—Hill Physicians Medical Group (HPMG); and a hospital system—Dignity Health. The population served approximately 42,000 CalPERS employees and their families covered by Blue Shield.

In this Health Affairs Blog interview, senior executives from each of the partnership organizations, all of whom have operational responsibilities and oversight of this ground-breaking Commercial ACO, discuss key operational aspects of the ACO and its implementation. They discuss evolution of the culture, governance and essential “partnership” relationships an ACO requires to survive and thrive. In addition, they detail specific operational initiatives designed to coordinate and manage care, and report on how these initiatives have fared over the four-year period since the ACO’s launch. Empirical results show success in many areas, with challenges in some others. Of particular note has been overall cost of health care (COHC) savings reported at gross savings of more than $105 million, with net savings of $95 million to CalPERS members, since 2010. Finally, the partners illuminate the ACO’s future directions and offer lessons for other organizations considering development of an ACO delivery system for the Commercial market.

The interview was supported by funding from the California HealthCare Foundation.

Read the rest of this entry »

Look At Consequences Of Rejecting Medicaid Expansion Leads First Quarter Health Affairs Blog Most-Read List


April 14th, 2014
by Tracy Gnadinger

Given their recent mention in Paul Krugman’s New York Times‘ column, it’s not surprising that Sam Dickman, David Himmelstein, Danny McCormick, and Steffie Woolhandler‘s discussion of the health and financial impacts of opting out of Medicaid expansion was the most-read Health Affairs Blog post from January 1 to March 31, 2014.

Next on the list was Robert York, Kenneth Kaufman, and Mark Grube‘s discussion of a regional study on the transformation from inpatient-centered care to an outpatient model focused on community-based care. This was followed by Susan Devore‘s commentary on changing health care trends and David Muhlestein‘s evaluation of accountable care organization growth.

Tim Jost is also listed four times for contributions to his Implementing Health Reform series on Medicaid asset rules, CMS letter to issuers, contraceptive coverage, and exchange and insurance market standards.

The full list appears below.

Read the rest of this entry »

March Madness: Medicare Part D’s Persistent Challenge And Opportunity


March 24th, 2014
by N. Lee Rucker

March Madness came early for CMS, with more than 7,600 public comments received on their Medicare Part D proposed rules and technical changes for 2015.  Less than 72 hours after that docket closed, CMS unfurled their white flag via a March 10 letter to Congress, retracting certain highly-contentious provisions, as previewed in recent posts on Health Affairs Blog by Jack Hoadley and Ian Spatz.  However, CMS’ hasty retreat should not signal a relaxed advocacy in the coming weeks.  Like NCAA basketball’s March Madness, much remains in play, especially given Part D’s programmatic (and patient-level) complexity.

For example, in their March 14 report to Congress, the Medicare Payment Advisory Commission (MedPAC) expressed concern “about the quality of pharmaceutical care received by beneficiaries with multiple medications.”  MedPAC notes that Part D enrollees’ medical problems may be “caused or exacerbated by their heavy use of medications (polypharmacy), and they are at increased risk of adverse drug events, drug-drug interactions, and use of inappropriate medications.”

To help alleviate such potential risk, prescient policymakers required Part D plan sponsors to implement medication therapy management (MTM) programs, something that I examined closely during my tenure at AARP.  Within Part D, MTM’s experience to date represents a cautionary tale of missed opportunities to bring clinicians, patients, and drug plans together to achieve the Triple Aim.  This commentary reviews several challenges, and identifies new positive cues to better integrate systematic, patient-centered medication management across all of Medicare.

Read the rest of this entry »

A Lifetime Value-Based Proposal For Medicare Payment Reform


March 14th, 2014
by Zhou Yang

urrent Medicare reform policy proposals mainly focus on lowering annual cost or cost increase per capita, but they fail to recognize Medicare as a lifetime plan that covers each beneficiary from age 65 to death. I propose a Lifetime Value-Based Payment Plan (LVBPP) for Medicare reform. LVBPP aims to achieve efficient use of the government contribution to Medicare for each beneficiary from age 65 to death and features shared responsibility among beneficiaries, providers, and federal government.

LVBPP includes six major components to create incentives for chronic disease prevention and efficient use of medical care resources by promoting market-based competition on quality of care and innovations in medical technology and care delivery models. Preliminary results indicate that LVBPP could lead to better health in terms of longer longevity and lower disability rate, save up to $70 billion over 10 years, and save up to $164 billion for the federal government over the lifetime of the cohort of upcoming beneficiaries age 55 to 59, as of the 2010 census. (The bases for these savings estimates, as well as suggested values for the expenditure thresholds and copayment rates involved in LVBPP, are provided in the Simulation Appendix below.)

The challenge. There is wide consensus that chronic disease is the leading cause of mortality and rapidly increasing health care costs in the US. Lifestyle choices have been found to be a major factor behind the increasing prevalence of chronic disease. It is estimated that 60 percent of deaths and 70 percent of health care spending in the US are related to lifestyle choices. However, despite volumes of science-based clinical trial results demonstrating positive effects of behavioral change on patients’ long-term well-being, and continuous public media campaigns promoting lifestyle change, there is no sign of reduction in the prevalence rate of chronic disease in the US population.

Read the rest of this entry »

Payors In Care Delivery: When Does Vertical Integration Make Sense?


February 5th, 2014
by Shubham Singhal

Editor’s note: In addition to Shubham Singhal (linked bio above) this post is authored by Rohit Kumar and Jeris Stueland. Rohit Kumar is a consultant in McKinsey’s Chicago office. Jeris Stueland, an expert in McKinsey’s Healthcare Systems and Services Practice, is also in the Chicago office.

This is the third in a periodic series of posts by McKinsey analysts on the landscape facing payors in the post-reform world. Read the first and second post in the series.

In recent years, much of the payor industry has transitioned away from a medically-underwritten to a guaranteed-issue, community-rated, risk-adjusted model. As a result, managing the total cost of care has become the dominant imperative for achieving competitive advantage.

As payors have sought ways to develop effective managed-care approaches for this new environment, interest in vertical integration has increased considerably. In the four years between 2005 and 2008, payors announced just 12 vertical integration M&A deals. In the subsequent four years, the number jumped to 26, and recent targets have largely been physician groups and integrated care organizations. These deals have not just been attempts to create competitive advantage—they have also been defensive plays to counteract potential challenges from provider consolidation and the acquisition of physician practices by hospital systems interested in vertical integration of their own.

Our research suggests that the economics of vertical integration makes sense for payors in only a minority of markets. For example, when we identified the markets in which the acquisition of physician groups appears to create economic value for payors, the total population included only about 80 million Americans. Furthermore, the significant execution challenges involved in integrating payors and physician practices at scale suggests that the markets we identified likely represent the outer limit of the feasible set.

We describe below the economic drivers of net value creation (or destruction) through vertical integration, the market conditions that indicate a given area may be fertile ground for positive value creation, and the execution challenges that must be overcome to capture the value.

Read the rest of this entry »

Health Affairs Issue Briefing: The Rise of Connected Health


January 17th, 2014
by Chris Fleming

An explosion of knowledge that is increasingly available through mobile devices and an array of telehealth and telemedicine technologies are linking the marvels of medicine to more patients and providers separated by geography. The February 2014 thematic issue of Health Affairs, “The Rise Of Connected Health,” examines these disruptive technologies and innovative services and their promise for improving health and access to care; potential for cost savings; rates of adoption and impact; and challenges of privacy, liability and regulatory policy.

Please join Health Affairs Founding Editor John Iglehart on Wednesday, February 5, at the Kaiser Family Foundation in Washington, DC, for a Health Affairs briefing at which we unveil the issue.

WHEN:
Wednesday, February 5, 2014
8:30 a.m. – 12:15 p.m.

WHERE:
Barbara Jordan Conference Center
Kaiser Family Foundation
1330 G Street NW, Washington, DC (Metro Center)

REGISTER ONLINE

Follow live Tweets from the briefing @HA_Events, and join in the conversation with the hashtag #HA_ConnectedHealth.

Read the rest of this entry »

A ‘Doc Fix’ That Still Needs Fixing


December 5th, 2013
by Rahul Rekhi

Recently, bipartisan leaders of two Congressional committees—Finance in the Senate and Means and Ways in the House—released a proposed solution for the longstanding “doc fix” dilemma. Thus far, this debate has seen lawmakers annually defer the deep Medicare physician pay cuts mandated by the (ironically named) “Sustainable Growth Rate” mechanism—postponed cuts that have today ballooned to nearly 25 percent. As such, in the aggregate, this draft proposal should be lauded for what it is: a wonky, bipartisan triumph against a thorny policy challenge amidst record-high Congressional gridlock. Because the current SGR system not only fails to provide incentives for physicians to rein in the volume of services they provide, but also cannot differentiate between increases in the volume of physicians’ services that are desirable (e.g. preventive care) and those that are not, the proposal’s call for replacing the SGR entirely is, well, entirely logical.

However, this appraisal comes with great caveat, for many of the solutions proffered by lawmakers in the draft document are also acutely incomplete. In capitalizing on the window of opportunity afforded by the historically low CBO-scored cost of an SGR repeal, the drafters of the proposal have rushed in stitching together the reform, and it shows. With visible seams, the proposal at times merely feels like a fix for the sake of nominally having one. How does this doc fix still need fixing? Let me count the ways.

Read the rest of this entry »

Bigger May Not Be Better: Does Scale Matter For Payors?


November 15th, 2013
by Shubham Singhal

Editor’s note: In addition to Shubham Singhal (photo and linked bio above), this post is authored by Rohit Kumar and Jeris Stueland. Rohit Kumar is a consultant in McKinsey’s Chicago office. Jeris Stueland, an expert in McKinsey’s Healthcare Systems and Services Practice, is also in the Chicago office. The authors would like to thank Ellen Rosen, Jim Oatman, and Michael K. Park for their contributions to this article.

This is the second in a periodic series of posts by McKinsey analysts on the landscape facing payors in the post-reform world. You can read the first post in the series here.

Whether scale brings competitive advantage to payors is a topic of hot debate. Many believe that consolidation is likely as the industry goes through the disruptive changes set in motion by reform. Some contend that anticipated margin compression and medical-loss-ratio floors will make scale efficiencies critical for achieving sustainable economics in the future. Others, however, note that managing the total cost of care is becoming central to a payor’s success, and question what advantages scale provides in such a world. If most health care is locally delivered, they argue, how much of the value created by cost-of-care management can scale drive?

Our research and experience suggest that for payors, the minimum threshold for efficient and effective scale is low. The primary rationale for scale emerges from the large fixed investments payors must make to develop the new capabilities needed to compete effectively in a rapidly changing regulatory and market environment (and to comply with evolving regulations). This rationale holds particularly true for payors that choose to build these capabilities themselves rather than through partnerships with external vendors, noncompeting plans, or other stakeholders in the value chain.

Yet, once the minimum level of scale is achieved, performance variability on administrative costs continues to be quite high. This suggests that for many payors the bigger opportunity to achieve administrative efficiencies is through operating model and organizational redesign, productivity enhancements, and application of design-to-value principles to core processes.

Read the rest of this entry »

Provider Opportunities for Population Health Improvement


November 5th, 2013
by Anand Parekh

Significant changes in the health care sector have been set in motion or accelerated by the Affordable Care Act.  For health care providers, much of this activity has focused on improving patient care and lowering costs.  There are also numerous opportunities through the Affordable Care Act for health care providers to improve population health, either […]

Read the rest of this entry »

Why Has ACO Growth Slowed?


October 31st, 2013
by David Muhlestein

Both public and private organizations have been aggressively pursuing Accountable Care Organizations (ACOs) as a way to improve health care outcomes, lower health care costs and improve patient satisfaction with care. With substantive industry interest and popular media coverage, the success or failure of ACOs at achieving their goals has significant implications for the American health care system.

I lead a team that is actively tracking, studying and interviewing organizations that are engaged in a variety of accountable care contracts. We estimate that the number of ACOs has grown from a few dozen at the end of 2010 to nearly 500 as of the end of September 2013. After significant growth through the end of January of this year, only 35 new ACOs have been announced (see Chart 1).

Coupled with the slower growth in the total number of ACOs, there has been slower growth in the number of lives covered by ACO arrangements. We estimate an increase of less than 3 million covered lives in all of 2013, from 17.4 million lives in December 2012 to 20.1 million through the end of September (see Chart 2), and that includes the 106 CMS ACOs announced in January. This recent slowed growth has raised the question of what this means for the accountable care movement.

Read the rest of this entry »

Hospital Progress To Meaningful Use: Status Update


October 15th, 2013
 
by Jennifer King and Julia Adler-Milstein

After languishing in the single digits for many years, hospital EHR adoption rates are dramatically increasing. A major driver is the Medicare and Medicaid EHR Incentive Programs, or the “Meaningful Use” program. A recent Health Affairs study suggested hospital participation in the program was lagging. In this post, we report the latest data, which paint a different picture — as of July 2013, two-thirds of hospitals have achieved Stage 1 Meaningful Use, and nearly all are engaged with the program in some way.

The incentive programs were designed to support greater adoption and use of EHRs, with the ultimate goal of improving patient care and health system outcomes. Eligible hospitals have received $9 billion in incentive payments since the programs began in 2011. Starting in 2015, eligible hospitals that do not demonstrate Meaningful Use will be subject to Medicare payment penalties. Beyond the Meaningful Use incentives, the extent to which hospitals are able to adopt and use health IT will have implications for their ability to successfully participate in new payment and delivery models and to improve care and outcomes.

Given the stakes and the rapidly changing landscape, regularly tracking progress towards widespread EHR adoption and use is important. New hospitals join the ranks of those who have achieved Meaningful Use each month, and important program milestones are near. To receive the maximum possible Medicare incentive amount, hospitals must achieve Meaningful Use Stage 1 by the end of 2013. Providers that achieved Stage 1 by the end of 2012 will move to Meaningful Use Stage 2 in 2014.

Read the rest of this entry »

Health Policy Brief: Biosimilars


October 10th, 2013
by Chris Fleming

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation explains key elements of the Biologics Price Competition and Innovation Act (BPCIA), a provision of the Affordable Care Act. The BPCIA authorizes the Food and Drug Administration (FDA) to develop an accelerated approval process for biosimilars. Biosimilars are follow-on versions of original therapies derived from a biological source, including vaccines, antitoxins, and blood products—commonly referred to as biologics.

The FDA released draft guidelines for an accelerated approval process for biosimilars in February 2012, but the widespread introduction of biosimilar drugs is likely several years away. This policy brief discusses the opportunities and challenges of producing and introducing biosimilars into the US marketplace.

Topics covered in this brief include:

What’s the background? The brief explains the evolution of the 1984 Hatch-Waxman Act, which provides the regulatory foundation for modern generic drugs. However, Hatch-Waxman does not apply to biosimilars, and, with demand for biologics expanding rapidly in the global marketplace, the Obama administration needed to establish a new regulatory review process in the United States for this type of drug. The United States can look to the work of the European Medicines Agency, which has an approval process in place. An article in the October 2013 issue of Health Affairs, by Francis Megerlin and colleagues, describes the European experience.

Read the rest of this entry »

The Privacy Conundrum And Genomic Research: Re-Identification And Other Concerns


September 11th, 2013
by Joel Kupersmith

No matter what the arena — finance, health care, or national security — questions surrounding the provision of personal data are always the same: how much benefit vs. how much risk? Who handles these data, and can those individuals be trusted? How do organizations guard against data misuse? What are the legal safeguards to protect privacy, and are they sufficient in an era when more data are shared more widely?

Nowhere is the privacy discussion more personal than in genomics, the very hardwiring of our existence. Genomic data are unique to individuals (or identical twins) and, except for occasional mutations, do not change over a lifetime, thereby rendering disclosures permanent. Genomic data also have special properties regarding privacy, especially as comprehensive whole genome sequencing becomes the major technique.

The benefits of amassing genomic data in sufficient case numbers for validity and making this knowledge available to an appropriately wide body of expert investigators are extensive. Research derived from genomic databases offers potentially large health payoffs. Genomics can help scientists predict who will develop a disease (e.g., Huntington’s Disease) and tailor treatments. It also holds the potential to bring about a paradigm shift in how we think about and classify disease; i.e., allowing us to move from the pathology-based approach begun in the late 19th century — which focuses on the progression of disease in a specific organto a biochemical-and genomics-based approach. This new approach is already being applied to a number of diseases, including certain cancers.

Read the rest of this entry »

Reducing Hospital Readmissions: It’s About Improving Patient Care


August 16th, 2013
 
by Debra Ness and William Kramer

The issue of unnecessary hospital readmissions is now front and center in the national conversation about the quality of health care. Thanks to Medicare’s readmissions reduction program, hospitals are working hard to bring their readmission rates down, and that’s good news — good news being drowned out by a chorus of complaints.

Avoidable readmissions are a strong indicator of a fragmented health care system that too often leaves discharged patients confused about how to care for themselves at home, and unable to follow instructions and get the necessary follow-up care. Readmissions are also a costly price to pay for a system that doesn’t have resources to spare; Medicare alone reports spending $17.8 billion a year on patients whose return trips to the hospital could have been avoided.

Unfortunately, too much of the conversation of late has turned to whether the penalties for excessive readmissions treat hospitals fairly, whether hospitals should be held accountable for issues patients face after discharge, and whether the readmission rate is even a valid measure of quality. The debate grew particularly loud this week, as the readmissions penalties increased from 1 percent to a maximum of 2 percent, as scheduled to occur in the Affordable Care Act.

Read the rest of this entry »

Pioneer ACOs’ Disappointing First Year


August 15th, 2013
by Jeff Goldsmith

On July 16, the CMS Innovation Center reported the first year results for the Pioneer ACO program: 13 Pioneers, or about 40 percent of the participants, earned bonuses. The program saved the Medicare program a gross $87.6 million before bonus distributions, cutting the rate of growth in Medicare spending by 0.5 percent, from 0.8 percent to 0.3 percent annually.

However, nine of the 32 members dropped out and press reports hinted at a contentious relationship between the Pioneers and a well meaning but green and overtaxed CMS staff. It was not an auspicious beginning for a program whose advocates believed would eventually replace regular Medicare’s present payment model. There immediately followed a blizzard of spin control from ACO “movement” advocates stressing the need for patience and highlighting first year achievements.

What was irritating about the Pioneer spin is it treated the ACO as if it were a brand new idea with growing pains. This studiously ignores a burned out Conestoga wagon pushed to the side of the trail: the Physician Group Practice demonstration CMS conducted from 2005-2010. The PGP demo tested essentially the same idea — provider bonuses for meeting spending reduction and quality improvement targets for attributed Medicare patients. The pattern of arrow holes and burn marks on the PGP wagon closely resemble those from the Pioneer’s first year, strongly suggesting more troubles ahead for the hardy, surviving Pioneers.

Read the rest of this entry »

Technology And The Changing Business Of Health Care


August 14th, 2013
 
by Thomas Daschle and Bill Frist

Three years after the passage of the Patient Protection and Affordable Care Act, popularly known as “Obamacare,” scholars and political pundits have paid much attention to the macroeconomic effects of the law. Will Obamacare bend the health care cost curve? What will be its impact on the federal budget deficit? How will it affect the bottom lines of small businesses and the economic security of the middle class?

When it comes to these questions, one can find a wide disparity of opinions among analysts, physicians, and even the authors of this commentary. But when it comes to the microeconomic ramifications of Obamacare — the effects the law will have on the business of delivering health care, especially in the non-hospital setting — there is little uncertainty: change is coming. As tens of millions of previously uninsured Americans obtain coverage, thereby allowing many to shop for doctors for the first time, the health care market will grow dramatically. Physicians thus will need to find ways to extend their capacity so that they can take advantage of this unique opportunity to expand their practices.

As the fee-for-service model continues its decline — and physician reimbursements come to be based on the quality, not quantity, of care — providing preventive care and promoting wellness will become a business, and not just clinical, priority. Meanwhile, Americans will take more ownership over their health care as they obtain insurance, face higher deductibles, and gain more knowledge through newly available price and quality information. Physicians will need to foster closer individual relationships with patients and prioritize not only cost efficiency, but also customer service, much in the way other businesses have in increasingly competitive retail sectors.

In this post, we outline the upcoming opportunities and challenges Obamacare is likely to present for physicians. We describe how physicians might adapt accordingly and suggest an embrace of emerging technology as a key element of success in the post-Obamacare practice.

Read the rest of this entry »

Health Reform Implementation Dominates HA Blog July Top Ten


August 12th, 2013
by Chris Fleming

As the October 1 start of open enrollment in the Affordable Care Act’s exchanges draws near, ACA implementation is on people’s minds. That’s reflected in the list of most-read Health Affairs Blog posts for July, which features several posts in Tim Jost’s series on health reform implementation. The list also features posts on accountable care organizations, geographic variations in health care, workplace wellness programs, and the likely make-up of the post-ACA-implementation uninsured.

The full list with links appears below:

Read the rest of this entry »

The Slowing Of Health Care Spending: Have We Turned A Corner?


August 9th, 2013
 
by Kenneth Kaufman and Mark Grube

The news in recent years has been good: Overall U.S. spending for health care in 2011 again grew only 3.9 percent. This represented the third consecutive year of a relatively slow growth rate, down from rates as high as 11 percent in 1990 and 7.6 percent in 2007. According to a report covering through last year, per-beneficiary Medicare spending grew at 1.7 percent annually from 2010 to 2012, down from growth of 4.3 percent between 2008 and 2009, and 5.3 percent between 2007 and 2008.

What accounts for the recent flattening of the cost curve and is it a transient phenomenon? The answers have significant implications for the nation’s current and future fiscal challenges, so the debate has been vigorous and particularly well reported in the recent press.

Sustainable or Not

Some economists argue that the lower rates of health spending growth reflect a prolonged economic slowdown and that once the economy returns to a more normal growth rate, the health spending growth rate could be expected to rise. This thesis is based on historical relationships between changes in economic growth and health spending growth.

Read the rest of this entry »

Click here to email us a new post.