Can We Avoid Fiscal Armageddon?

ROCHESTER, N.Y. (02/01/2011)(readMedia)-- Growth in U.S. health care spending has persistently exceeded growth in the country's gross domestic product, and projections for the coming decades show health care absorbing twice the share of income growth as in past decades. Evidence overwhelmingly points to the spread of new medical technology as the primary driver of health care spending growth.

Michael Chernew, Ph.D., a Harvard Medical School professor and expert on health care expenditures, examines the causes and consequences of health care spending growth in a new article, and says the U.S. simply cannot afford the ongoing gap between health spending and income growth. The article, "Health Care Spending Growth: Can We Avoid Fiscal Armageddon?," was commissioned by Excellus Health Plan, Inc.; it is available online early at http://www.inquiryjournalonline.org/doi/pdf/10.5034/inquiryjrnl_47.04.285 and will appear in INQUIRY's winter issue.

Despite the clinical benefits of new technology, Chernew says the current fiscal pattern for health spending is not sustainable, especially for public spending. "If not abated, high public spending will require either substantially higher taxes or debt, both of which could lead to fiscal Armageddon," he writes. ". . .All stakeholders, particularly health care providers, will need to adapt to the pressure."

A member of the Medicare Payment Advisory Commission, the Congressional Budget Office's Panel of Health Advisors and the Commonwealth Foundation's Commission on a High Performance Health Care System, Chernew's recent research has focused on the growth of health spending. He also has worked with companies on designing packages that can both minimize financial barriers to high-value health care services and reduce costs.

In the INQUIRY paper, Chernew discusses changes likely to occur, such as higher out-of-pocket expenses for patients and lower fees paid to providers from both public and private payers. He also predicts that payment rates to providers will rise more slowly than in the past, probably by less than inflation, and a new type of payment that "bundles" reimbursement across providers and services will be instituted.

". . .The health care system will be transformed over the next decade," Chernew writes. "Ideally, that transformation will lead to a more efficient system of care delivery. This will require a partnership among major stakeholders to develop information and data-sharing systems and programs for managing population health in ways that promote affordable high-quality outcomes."

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INQUIRY, the journal of health care organization, provision, and financing, is in its 47th year. The nonprofit Excellus Health Plan, Inc., publishes INQUIRY; the journal maintains a freelance editorial staff and is run as an independent, peer-reviewed, quarterly academic journal. Press releases and article abstracts are available on the INQUIRY website at www.inquiryjournal.org under "Current Issue Table of Contents."

Posted Tuesday February 01, 2011 at 06:02 am by Inquiry Journal
Last Updated Thursday August 04, 2011 at 05:06 pm