Coverage expansion is taking a back seat as costly medical advances and the burden of obesity chew up more of the healthcare spending pie
WASHINGTON, D.C.- The global financial crisis and huge federal government commitment to stabilize the nation's banking system has moved healthcare cost-cutting high up the policy agenda.
Talk of expanding coverage for the uninsured and underinsured is taking a back seat to initiatives to curb wasteful and excessive spending on healthcare in the United States.
In fact, expanding insurance coverage to more people, while desirable and ethical, will boost spending even more. A new report sponsored by the Robert Wood Johnson Foundation finds that high prices, inefficiencies and the added cost of insurance administration drive outlays for healthcare in the United States much higher than in other developed nations. The U.S. spends more than 15% of gross domestic product (GDP), compared with 11% for France and less than 10% for Germany, Canada, Australia, the United Kingdom and Japan.
Behind the healthcare cost rise are new medical technology and rising obesity rates-not aging or medical liability, Ginsburg says. Medical technology may account for about 40% to 65% of the growth in spending by encouraging additional treatment and by replacing less-expensive technology with new products and services.
PUSH FOR PRODUCTIVITY
At the same time, the healthcare sector has not enjoyed comparable improvements in productivity as seen in other U.S. industries. This is due, according to the analysis, to limited price competition among healthcare providers because of extensive third-party payment, and to payment policies that reward increased service rather than more efficient care.
To restrain the spending growth, Ginsburg and his colleagues urge more funding for research on medical technology effectiveness to better target new technology to those patients most likely to benefit.
Of importance to insurers is the call for added efficiencies to reduce administrative costs inherent in the multi-payer U.S. healthcare system. The creation of insurance exchanges could reduce the distribution costs of insurance purchased by individuals or small employers.
There are lessons to be learned from how managed care helped moderate spending trends in the 1980s and early 1990s, the report says. Although controls were abandoned by health plans in the wake of the managed care backlash, some cost curbs are being reintroduced in a "more targeted and less-intrusive manner." These include prior authorization for imaging and limiting imaging networks to those that meet quality standards.
Some cost-control methods that have gained popularity include expanded health IT and medical liability reform. These may have less of an impact on healthcare spending, but do have potential to improve quality of care.
"The big-ticket play is in productivity," says consultant Robert Laszewski. In commenting on the report, he cited the need for discriminate use of medical technology, practicing outcomes-based medicine and reducing overhead in the insurance system. "If we only increase access and don't hit the healthcare productivity issues head-on, we will simply craft a system we will never be able to sustain."
FDA Issues Complete Response Letter for Pz-Cel to Treat Epidermolysis Bullosa
April 22nd 2024Prademagene zamikeracel is a cell therapy designed to incorporate the functional collagen-producing COL7A1 gene into a patient’s own skin cells. The FDA is asking for additional information on manufacturing practices.
Read More
In this episode of the "Meet the Board" podcast series, Briana Contreras, Managed Healthcare Executive editor, speaks with Ateev Mehrotra, a member of the MHE editorial advisory board and a professor of healthcare policy and medicine at Harvard Medical School. Mehtrotra is also a hospitalist at the Beth Israel Deaconess Medical Center in Boston. In the discussion, Contreras gets to know Mehrotra more on a personal level and picks his brain on some of his research interests including telehealth, alternative payment models and price transparency.
Listen
FDA Approves Stelara Biosimilar, Selarsdi
April 18th 2024Alvotech’s Selarsdi (ustekinumab-aekn), a biosimilar referencing Stelara (ustekinumab), gained FDA approval, making it the second ustekinumab biosimilar and second for the company to be given the green light for the American market.
Read More
Drugs to Watch: Mental Health Conditions
April 11th 2024The FDA is reviewing two novel therapies: a psychedelic-assisted therapy for PTSD with a target action date of Aug. 11, 2024, and therapy for schizophrenia that does not directly block dopamine receptors with an action date of Sept. 26, 2024.
Read More