The future of US health spending: Understanding the slowdown
Recently, the Engelberg Center for Healthcare Reform at the Brookings Institution brought together experts of economics and health policy to discuss the future of health care spending . The first session considered important background information on the expenditure of health care that has provided a basis for further discussion on current and future trends.
The panel
Dr. Louise M. Sheiner is senior economist at the Board of Governors of the Federal Reserve System. His areas of interest include tax policy, public economics, health, education and welfare. His publications are numerous and include the document presented and discussed during the session entitled "Perspectives on the growth of health care spending."
Dr. Charles Roehrig is Vice President and director of Altarum Center for sustainable health spending. the Altarum Institute is a research and consulting non-profit organization specializing in health systems. the research of Dr. Roehrig is related to the timely follow-up of health spending, and the determination of future and sustainable patterns of growth in health spending. His research has been published in journals evaluated by respected peers.
Dr. Amitabh Chandra is Professor of political public and research director of health policy at the Kennedy School of government at Harvard. Dr. Chandra is an economist whose research focuses on several aspects of health care, including productivity and cost growth, and medical malpractice racial disparities. His research has been supported by organizations such as NIH and Robert Wood Johnson Foundation and published in various journals, peer-reviewed.
The panel was moderated by Dr. Mark McClellan who is a principal investigator and director of the Innovation Initiative and value of health care at the Brookings Institution. Dr. McClellan is a physician and economist whose centers on promoting the quality and value in health care focused on patient work.
Key Insights
In the first panel of the day, participants set the stage for the remaining conversations exploring the past trends spending on health care.
Out-of-Pocket Expenses
- The percentage of out-of-pocket expenses over total health expenditure has decreased since 1960. According to the Dr. Sheiner, this should not be surprising because "the insurance is supposed to provide ... if we had not seen declines -of-pocket expenses over time while health spending has become a larger share and greater income, being sick is something more and more difficult for people to deal with. ... So to counter this, the insurance contracts have changed and we had lower out-of-pocket expenses. "
- What is surprising is the contrast between the decline outside the pocket spending relative to income even as overall health spending has tripled in percentage of GDP. Dr. Sheiner suggested this contrast points to significant changes in the "structure of the cover to be able to have offset all of the increase in health expenditure as percentage of GDP when it comes to outside pocket expenses. "
public funding
- Expansions of public funding such as Medicare and Medicaid effect decreases in spending out-pocket terms of number of people and the number of covered services. in 2012, government health spending accounted for nearly 45 percent of total health spending.
- Dr. Sheiner noted that reductions in spending out of pocket and increases in public funding "are reflections of society's demands." As the health technology such as screening techniques or treatment plans have evolved and improved, the public wanted affordable access to these advances. Thus, Dr. Sheiner said: "We thought how to change our structures so that ... most people could get [access to health technology]," including those who have coverage funded
relative Price
- medical price increases (relative to inflation) are also important factors in health spending with labor costs of medical work plays a particularly important role
- wages of nurses have increased significantly over wage increases generally. - growth that is offset by higher levels of education among nurses. as health systems have evolved into a more sophisticated technological era, those who work within the system had to become more educated and
Louise Sheiner of @federalreserve :. Why #healthspending slower ? How long will it last? http://t.co/xVdobCsMVE (MT @BrookingsMed)
- MHA @ GW (@GWonlineMHA) April 11, 2014 Finally, panelists demonstrated how previous GDP actually provides that expenditure of current health care. Over time, we see a lag of about four years between the economic recession and health spending. The main effects of a recession are slow to affect health spending, because they are mediated by employers or the government. It takes time for these entities to negotiate cheaper contracts with health insurers more time to implement the reductions of coverage before the changes actually affect employee health costs.
The panelists were reluctant to make firm predictions in terms of the future growth of health spending rate, but noted that innovations such as the abandonment of remuneration models services are needed to help temper the growth rate of health care spending.
as spending continues to fluctuate health care, trained professionals such as MHA @ GW will play a key role in helping systems and patients to understand the impact of effective spending on the future public health. For more coverage of "The Future of US health spending," check the previous messages with other sessions recaps, including "budgets and the private sector" and "what is possible while improving health ? "
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