Health Spending Has Been Slowing For More Than A Decade
The reason: technology and patient power:
Contrary to the perennial doomsaying, the health-care system is—almost in spite of itself—getting better. A generation of breakthrough drugs for chronic disease, mental illness, HIV and cancer were developed in the 1980s and ’90s at great cost. Dozens of these drugs—like Zocor for heart disease or Zyprexa for schizophrenia—are now widely available, many in generic form. There are now countless electronic ways of telling patients about them. And health insurers are driven by their own evolving market disciplines to make sure patients start taking them and keep taking them in the cheapest available versions.
Combine all these new medicines, information channels and business compulsions with the slow, steady transfer of economic responsibility for health care—from corporate and government bureaucrats to consumers and their families—and suddenly health-care starts to look almost like an actual market.
More from J.D. Kleinke in The Wall Street Journal.
I read this, but I’m not sure what to make of it. Could it be that higher deductibles and cost-sharing are finally making a difference in the growth of medical spending after years of experimentation? Does this mean we just need to stay the course and continue the current experiments? The Affordable Care Act (ACA) takes us in the opposite direction. The ACA assumes insurance is the primary way patients should pay for medical care, and patients should be exposed to as little cost-sharing as possible (maybe I oversimplify but ACA proponents dislike cost-sharing for all but the wealthiest, most health literate crowd).
If cost-sharing is beginning to slow the growth in health care spending, experiments should be extended to Medicare and Medicaid. It’s worth taking the time to see if this is an anomaly or a trend that is likely to continue. The RAND Health Insurance Experiment (from the 1970s) found cost sharing could lower medical spending by about 30 percent without impacting health for all but the poorest patients.
This is really interesting, if true.
I haven’t heard this argument before. It’s refreshing.
Plus, it shows us how important policy is. On the demand side, the changes can be traced in a pretty solid line to the Medicare Modernization Act (2003) which gave us Health Savings Accounts and re-invigorated Medicare Advantage.
On the supply side, the Prescription Drug User Fee Act (PDUFA), first enacted in 1992, 1997, 2002, and 2007. Each re-iteration marginally improved the FDA’s capacity to license new medicines. However, it did not have a long-term effect and the increase in the FDA’s budget did not prevent it from returning to the bureaucratic mean behavior a few years ago.
PPACA is bringing all the improvements of the first decade of the 21st century to a halt, because it effectively crushes consumer-driven health care (as the latest RAND study demonstrates) and increases the burden on medical innovation.
Read their comments. 2% inflation and 4% cost of health care!! It still exceeds inflation and always will.