Managed Care

 

Just What Causes Health Care Inflation?

MANAGED CARE January 2014. © MediMedia USA
News & Commentary

Just What Causes Health Care Inflation?

Aging of the population and increased demand for services are not why costs have risen so quickly in health care, according to a study in the Journal of the American Medical Association.

“Between 2000 and 2011, increase in price (particularly of drugs, medical devices, and hospital care), not intensity of service or demographic change, produced most of the increase in health’s share of GDP,” say the authors of “The Anatomy of Health Care in the United States” in JAMA’s November 13 issue.

In 2011, health care expenditures totaled about $2.7 trillion, nearly 18% of the economy.

Since 2000, about 91% of health care inflation can be pinned on hospital charges and the cost of drugs and devices.

“The continued increase of health care as a portion of the economy can largely be [attributed] to the failure of the rest of the economy to increase much at all,” the authors argue.

It might get worse, they add, citing a growing focus on population health.

“Clinicians increasingly are expected to substitute social and economic goals for the needs of a single patient,” says the study. “These contradictory forces are difficult to reconcile, creating risk of growing instability and political tensions.”

They add, “The relative decline in personal spending on health care accompanies (and abets) the shift from medicine’s historical commitment to a single individual and substitutes responsibility for groups of people, representing ascendancy of the public health and social policy perspectives over that of traditional, individually focused medicine. This change produces many ethical, cultural, and economic questions.”

The study also contradicts the common assumption that people pay more out of pocket and in premiums than in the past. Those charges have increased “more slowly than employers’ share of premiums for private insurance and Medicare. . . . These data contradict another common perception that personal out-of-pocket spending for premiums and copayments [has] increased faster than [spending by] government and employers.”

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Private Health Insurance Exchanges Conference Washington, D.C. October 7–8, 2014
National Healthcare Facility Management Summit Palm Beach, FL October 16–17, 2014
National Healthcare CFO Summit Las Vegas, NV October 19–21, 2014
National Healthcare CXO Summit Las Vegas, NV October 19–21, 2014
Innovative Member Engagement Operations For Health Plans Las Vegas, NV October 20–21, 2014
4th Partnering With ACOs Summit Los Angeles, CA October 27–28, 2014
2014 Annual HEDIS® and Star Ratings Symposium Nashville, TN November 3–4, 2014
PCMH & Shared Savings ACO Leadership Summit Nashville, TN November 3–4, 2014
World Orphan Drug Congress Europe 2014 Brussels, Belgium November 12–14, 2014
Medicare Risk Adjustment, Revenue Management, & Star Ratings Fort Lauderdale, FL November 12–14, 2014
Healthcare Chief Medical Officer Forum Alexandria, VA November 13–14, 2014
Home Care Leadership Summit Atlanta, GA November 17–18, 2014