US Health Care Spending Research Articles

New evidence on factors affecting the level and growth of US health care spending

The dual problems of high and rising medical care expenditures and substantial differences in spending across geographic regions have long plagued the US health care system. We provide new evidence to explain why some states and regions of the country spend much more on medical care than others, and why health care spending for the nation as a whole has been growing rapidly over the last several decades. To do this, we estimate a health care spending panel data model using annual data on all 50 states for the period 1993–2009. Our model includes a number of socio-economic, health care provider, lifestyle and environmental variables that past studies indicate may affect the level or growth of aggregate health care spending. We exploit the time effect component of our model to obtain an upper-bound estimate of the effect of advances in medical technology. Our findings indicate that the most important factors influencing the level of spending are availability of providers, income, excessive alcohol consumption, Medicaid coverage, HMO health plans and the proportion of the population elderly and African-American. The principal drivers of growth have been the continual introduction of new medical technologies, and the growth of providers and income.

Quantifying the relative value of drug therapy options in HER2+, ER-/PR- breast cancer.

6602 Background: US health care spending continues to exceed that of other industrialized countries, in part because there is insufficient transparency as to the relative value (benefit-cost) of di...

Value-Based Purchasing in Healthcare: How the US Government is Securing Quality Improvement in Care in the United States

Governments have a responsibility to be good stewards of public funds. In the US health care spending accounts for 17.4% of GDP and totalled $2.9 trillion in 2013. Over the last fifty years the US government has become one of the nation’s largest health insurers through sponsorship of programs for elderly and low-income, disabled people. The primary program, Medicare, is run by the Centre for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services. CMS currently funds over a third of the services in the US and insures over 100 million people

Explaining the Growth in US Health Care Spending Using State-Level Variation in Income, Insurance, and Provider Market Dynamics.

The slowed growth in national health care spending over the past decade has led analysts to question the extent to which this recent slowdown can be explained by predictable factors such as the Great Recession or must be driven by some unpredictable structural change in the health care sector. To help address this question, we first estimate a regression model for state personal health care spending for 1991-2009, with an emphasis on the explanatory power of income, insurance, and provider market characteristics. We then use the results from this simple predictive model to produce state-level projections of health care spending for 2010-2013 to subsequently compare those average projected state values with actual national spending for 2010-2013, finding that at least 70% of the recent slowdown in health care spending can likely be explained by long-standing patterns. We also use the results from this predictive model to both examine the Great Recession’s likely reduction in health care spending and project the Affordable Care Act’s insurance expansion’s likely increase in health care spending.

National health spending in 2013: growth slows, remains in step with the overall economy.

In 2013 US health care spending increased 3.6percent to $2.9trillion, or $9,255 per person. The share of gross domestic product devoted to health care spending has remained at 17.4percent since 2009. Health care spending decelerated 0.5 percentage point in 2013, compared to 2012, as a result of slower growth in private health insurance and Medicare spending. Slower growth in spending for hospital care, investments in medical structures and equipment, and spending for physician and clinical care also contributed to the low overall increase.

Quality health care for children and the Affordable Care Act: a voltage drop checklist.

The Affordable Care Act (ACA) introduces enormous policy changes to the health care system with several anticipated benefits and a growing number of unanticipated challenges for child and adolescent health. Because the ACA gives each state and their payers substantial autonomy and discretion on implementation, understanding potential effects will require state-by-state monitoring of policies and their impact on children. The "voltage drop" framework is a useful interpretive guide for assessing the impact of insurance market change on the quality of care received. Using this framework we suggest a state-level checklist to examine ACA statewide implementation, assess its impact on health care delivery, and frame policy correctives to improve child health system performance. Although children's health care is a small part of US health care spending, child health provides the foundation for adult health and must be protected in ACA implementation.

Geographic Differences in US Health Care Spending—Reply

Geographic Differences in US Health Care Spending—Reply

Geographic Differences in US Health Care Spending

In their Viewpoint regarding the Institute of Medicine (IOM) report on geographic variation in health care spending, Drs Newhouse and Garber1 indicated the spending data were adjusted for geographically different input prices. Use of a flawed input price–adjustment method leaves many of the IOM report’s conclusions in doubt. The input price adjustment did not use the actual dollars spent on physician work but used geographic practice cost index (GPCI) adjusters to change the spending figures to reflect local differences in input price.2

Will the Recent Slowdown in Health Care Cost Growth Improve Medicare’S Financing Outlook?

In recent years US health care spending growth has slowed. Analysts have sought to explain the causes of this slowdown and to understand its implications for Medicare's financial outlook. Some have suggested the slowdown reflects transformational change in the health care sector facilitated by the Affordable Care Act (ACA), possibly lessening the need for further legislation to shore up Medicare finances. Explaining the recent cost slowdown is likely to remain a subject of debate among experts for some time. Regardless of the outcome of that debate, however, the slowdown does not translate into a significant probability that further Medicare reforms can be avoided. Medicare's trust funds are now in weaker condition than projected before the cost slowdown. The cost slowdown preceded the ACA's passage and cannot be principally attributed to it. Going forward, Medicare costs are substantially more likely to be higher than the trustees' current projections than they are to be lower. Importantly, longstanding methodologies for projecting Medicare finances already assumed a substantial, enduring, long-term deceleration in national health cost growth. Nothing about the recent cost slowdown suggests that Medicare's long-term financial future will be more benign than now projected.

The Affordable Care Act and the Opportunity to Improve Prevention in Women: How to Make the Most of the Law

Preventable chronic illnesses cause 7 of 10 American deaths each year and account for 75% of US healthcare spending (1). Women are disproportionately affected by chronic disease, which negatively impacts their quality of life and their economic status (2). Women's major chronic illnesses are estimated to cost about $466 billion per year, which does not include lost potential income and additional economic impact to women and their families (2). Prevention and access to preventive services are critical to maintaining a woman's health across the lifespan. Women's preventive care is especially important for the health of future generations given the direct impact a woman's health has on birth outcomes. Yet, despite the importance of preventive care, more than half of American women are not up to date on recommended preventive services (3). A major barrier to preventive care is cost. Women use more healthcare services than men, due in part to more complex reproductive healthcare needs, longer life expectancies, and higher rates of chronic disease (4, 5). Yet women often have lower mean incomes and greater difficulty affording care. Even minimal levels of cost sharing, in the form of copays and other out-of-pocket expenses, may have a negative impact on the utilization of preventive services (3). Fortunately, the Affordable Care Act (ACA)4 takes a number of steps to improve health through a robust prevention policy. At the centerpiece of the ACA's prevention initiative is the elimination of cost sharing for many preventive services, including 8 key women's health preventive services recommended by the Institute of Medicine (IOM) and adopted by the US Department of Health and Human Services (HHS) on August 1, 2012 (Table 1). Prevention and early detection of health conditions or diseases identified during a well-woman visit and regular preventive screenings can lead to effective …

Slow growth in US healthcare spending through 2013

Slow growth in US healthcare spending through 2013

Contribution of Preventable Acute Care Spending to Total Spending for High-Cost Medicare Patients

A small proportion of patients account for the majority of US health care spending, and understanding patterns of spending among this cohort is critical to reducing health care costs. The degree to which preventable acute care services account for spending among these patients is largely unknown. To quantify preventable acute care services among high-cost Medicare patients. We summed standardized costs for each inpatient and outpatient service contained in standard 5% Medicare files from 2009 and 2010 across the year for each patient in our sample, and defined those in the top decile of spending in 2010 as high-cost patients and those in the top decile in both 2009 and 2010 as persistently high-cost patients. We used standard algorithms to identify potentially preventable emergency department (ED) visits and acute care inpatient hospitalizations. A total of 1,114,469 Medicare fee-for-service beneficiaries aged 65 years or older were included. Proportion of acute care hospital and ED costs deemed preventable among high-cost patients. The 10% of Medicare patients in the high-cost group were older, more often male, more often black, and had more comorbid illnesses than non-high-cost patients. In 2010, 32.9% (95% CI, 32.9%-32.9%) of total ED costs were incurred by high-cost patients. Based on validated algorithms, 41.0% (95% CI, 40.9%-41.0%) of these costs among high-cost patients were potentially preventable compared with 42.6% (95% CI, 42.6%-42.6%) among non-high-cost patients. High-cost patients accounted for 79.0% (95% CI, 79.0%-79.0%) of inpatient costs, 9.6% (95% CI, 9.6%-9.6%) of which were due to preventable hospitalizations; 16.8% (95% CI, 16.8%-16.8%) of costs within the non-high-cost group were due to preventable hospitalizations. Comparable proportions of ED spending (43.3%; 95% CI, 43.3%-43.3%) and inpatient spending (13.5%; 95% CI, 13.5%-13.5%) were preventable among persistently high-cost patients. Regions with high primary care physician supply had higher preventable spending for high-cost patients. Among a sample of patients in the top decile of Medicare spending in 2010, only a small percentage of costs appeared to be related to preventable ED visits and hospitalizations. The ability to lower costs for these patients through better outpatient care may be limited.

If Slow Rate Of Health Care Spending Growth Persists, Projections May Be Off By $770 Billion

Despite earlier forecasts to the contrary, US health care spending growth has slowed in the past four years, continuing a trend that began in the early 2000s. In this article we attempt to identify why US health care spending growth has slowed, and we explore the spending implications if the trend continues for the next decade. We find that the 2007-09 recession, a one-time event, accounted for 37 percent of the slowdown between 2003 and 2012. A decline in private insurance coverage and cuts to some Medicare payment rates accounted for another 8 percent of the slowdown, leaving 55 percent of the spending slowdown unexplained. We conclude that a host of fundamental changes--including less rapid development of imaging technology and new pharmaceuticals, increased patient cost sharing, and greater provider efficiency--were responsible for the majority of the slowdown in spending growth. If these trends continue during 2013-22, public-sector health care spending will be as much as $770 billion less than predicted. Such lower levels of spending would have an enormous impact on the US economy and on government and household finances.

Large Increases In Spending On Postacute Care In Medicare Point To The Potential For Cost Savings In These Settings

Identifying policies that will cut or constrain US health care spending and spending growth dominates reform efforts, yet little is known about whether the drivers of spending levels and of spending growth are the same. Policies that produce a one-time reduction in the level of spending, for example by making hospitals more efficient, may do little to reduce subsequent annual spending growth. To identify factors causing health care spending to grow the fastest, we focused on three conditions in the Medicare population: heart attacks, congestive heart failure, and hip fractures. We found that spending on postacute care-long-term hospital care, rehabilitation care, and skilled nursing facility care--was the fastest growing major spending category and accounted for a large portion of spending growth in 1994-2009. During that period average spending for postacute care doubled for patients with hip fractures, more than doubled for those with congestive heart failure, and more than tripled for those with heart attacks. We conclude that policies aimed at controlling acute care spending, such as bundled payments for short-term hospital spending and physician services, are likely to be more effective if they include postacute care, as is currently being tested under Medicare's Bundled Payment for Care Improvement Initiative.

Does Well-Child Care Have a Future in Pediatrics?

The most common adult chronic diseases affect 1 in 3 adults and account for more than three-quarters of US health care spending. The major childhood drivers of adult disease are distinctly nonmedical: poverty, poor educational outcomes, unhealthy social and physical environments, and unhealthy lifestyle choices. Ideally, well-child care (WCC) would address these drivers and help create healthier adults with more productive lives and lower health care costs. For children without serious acute and chronic medical problems, however, traditional pediatric preventive services may be largely ineffective in addressing the outcomes that really matter; that is, improving lifelong health and reducing the burden of adult chronic disease. In this article, we examine what role WCC has in addressing the major childhood drivers of adult disease and consider various models for the future of WCC within pediatrics.

National Health Spending In 2011: Overall Growth Remains Low, But Some Payers And Services Show Signs Of Acceleration

In 2011 US health care spending grew 3.9 percent to reach $2.7 trillion, marking the third consecutive year of relatively slow growth. Growth in national health spending closely tracked growth in nominal gross domestic product (GDP) in 2010 and 2011, and health spending as a share of GDP remained stable from 2009 through 2011, at 17.9 percent. Even as growth in spending at the national level has remained stable, personal health care spending growth accelerated in 2011 (from 3.7 percent to 4.1 percent), in part because of faster growth in spending for prescription drugs and physician and clinical services. There were also divergent trends in spending growth in 2011 depending on the payment source: Medicaid spending growth slowed, while growth in Medicare, private health insurance, and out-of-pocket spending accelerated. Overall, there was relatively slow growth in incomes, jobs, and GDP in 2011, which raises questions about whether US health care spending will rebound over the next few years as it typically has after past economic downturns.

Growth in US healthcare spending remains low

Growth in US healthcare spending remains low

High US Health-Care Spending and the Importance of Provider Payment Rates.

We compare health care spending in the USA to other industrialized countries and find that payment rates for hospitals, physicians, and drugs are generally much higher in the USA than they are in other industrialized countries while the quantity of services - as measured by the number of physician visits, hospital days and prescriptions filled per capita - is relatively similar across countries. We then explore policy initiatives designed to control payment rates and volume of services and review the success and failures of these initiatives. Within the USA, the private sector pays significantly higher rates for hospital and physician services and drugs than the public sector. Thus, if the USA is going to reduce health care spending, it may be necessary to begin by reducing payment rates in the private sector. Options to achieve this goal are presented.

Beyond Capitation: How New Payment Experiments Seek To Find The ‘Sweet Spot’ In Amount Of Risk Providers And Payers Bear

A key issue in the decades-long struggle over US health care spending is how to distribute liability for expenses across all market participants, from insurers to providers. The rise and abandonment in the 1990s of capitation payments-lump-sum, per person payments to health care providers to provide all care for a specified individual or group-offers a stark example of how difficult it is for providers to assume meaningful financial responsibility for patient care. This article chronicles the expansion and decline of the capitation model in the 1990s. We offer lessons learned and assess the extent to which these lessons have been applied in the development of contemporary forms of provider cost sharing, particularly accountable care organizations, which in effect constitute a search for the "sweet spot," or appropriate place on a spectrum, between providers and payers with respect to the degree of risk they absorb.

Saving Money or Just Saving Lives? Improving the Productivity of US Health Care Spending.

There is growing concern over the rising share of the US economy devoted to health care spending. Fueled in part by demographic transitions, unchecked increases in entitlement spending will necessitate some combination of substantial tax increases, elimination of other public spending, or unsustainable public debt. This massive increase in health spending might be warranted if each dollar devoted to the health care sector yielded real health benefits, but this does not seem to be the case. Although we have seen remarkable gains in life expectancy and functioning over the past several decades, there is substantial variation in the health benefits associated with different types of spending. Some treatments, such as aspirin, beta blockers, and flu shots, produce a large health benefit per dollar spent. Other more expensive treatments, such as stents for cardiovascular disease, are high value for some patients but poor value for others. Finally, a large and expanding set of treatments, such as proton-beam therapy or robotic surgery, contributes to rapid increases in spending despite questionable health benefits. Moving resources toward more productive uses requires encouraging providers to deliver and patients to consume high-value care, a daunting task in the current political landscape. But widespread inefficiency also offers hope: Given the current distribution of resources in the US health care system, there is tremendous potential to improve the productivity of health care spending and the fiscal health of the United States.