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'It's a really smooth, upward-sloping line'

MANAGED CARE April 2001. © MediMedia USA

'It's a really smooth, upward-sloping line'

MANAGED CARE April 2001. ©MediMedia USA

Sidebar to: RECESSION-PROOF: Why HMOs Could Thrive In the Economic Downturn

'It's a really smooth, upward-sloping line'

A look at total health care spending over the decades illustrates why some experts — including the nationally recognized Uwe Reinhardt, Ph.D., a professor of health economics at Princeton University — believe that managed care is recession-proof.

Reinhardt takes HCFA's measurement of actual spending on health care over the years as well as an early HCFA projection for 2000 and plots a trend line based on that data. He divides HCFA's gross figures by population to get per capita spending, adjusts for inflation, and expresses everything in 2000 dollars.

For 1965-1987, the trend line is almost precisely what was actually spent. In 1987, however, actual spending rises above the trend line. What happens then? Managed care to the rescue. Notice that for 1992-1998, actual spending flattens and then falls beneath the trend line.

Total health spending per capita in constant (2000) dollars

SOURCE: Uwe Reinhardt, PRINCETON UNIVERSITY, USING DATA FROM U.S. HEALTH CARE FINANCING ADMINISTRATION