Health Spending of GDP Could Decrease Over Next Two Decades

Article

Deloitte health report projects a deceleration in health spending, likely creating a U.S. $3.5 trillion “well-being dividend” by 2040. The report shares what the future of health could look like: new business models, emerging technologies, and highly engaged consumers.

Healthcare spending in the United States topped $3.8 trillion dollars in 2019 — nearly 18% of the gross domestic product (GDP) — as projected by the CMS Office of the Actuary.

Prior to the COVID-19 pandemic, CMS had projected health spending would continue to grow at a rate of 5.3% a year, reaching nearly $6.2 trillion by 2028. If those increases were to continue unabated over the next 20 years, health spending could reach a staggering $11.8 trillion by 2040.

However, finance firm Deloitte released a report recently predicting health spending as a percentage of the GDP will decelerate over the next 20 years.

In the new Deloitte report, "Breaking the cost curve: Deloitte predicts health spending as a percentage of GDP will decelerate over the next 20 years," it anticipates that emerging technologies, an ability to cure and prevent disease (or detect disease in the earliest stages), and highly engaged consumers will lead to a deceleration of health spending between now and 2040.

The report predicted three separate areas will take shape by 2040:

  1. A $3.5 trillion well-being dividend: Deloitte models show that by 2040, health spending will make up 18.4% of the GDP (about $8.3 trillion), driven by a significant decrease in spending devoted to treatment, and much higher spending on activities and enterprises that sustain well-being. The $3.5 trillion ends up being the difference between CMS's projection and Deloitte's model.

    Deloitte advises the U.S. government, private enterprises and consumers could invest this well-being dividend in areas of potential societal impact such as improving the infrastructure and reducing household debts.
  2. A shift in spending: The U.S. healthcare system has historically focused on the treatment of diseases. For every $100 spent on healthcare, about $80 is typically spent diagnosing and treating patients after they become sick, the report says. In the future, well-being spending is likely to encompass not only the treatment of physical and mental illness, but also investments in data and algorithms that help generate health and well-being insights.
  3. A new health economy will drive 85% of revenue as a result of three major transformations:

    a. The end of the general hospital
    : Patients who do need care will likely receive it in highly specialized settings that are tailored to service a specific need rather than being a "one-stop" for all disease states and specialties.
    b. The slowdown of mass-produced therapies: As more health data is collected on individual consumers, we expect biopharma companies will be able to drill down and analyze patients, and their conditions, in new ways. The insights generated from this data can be used to develop treatments that are tailored specifically for the individual.
    c. The change in how healthcare is financed:
     As health-related technology advances in terms of prevention and wellness, some of today's risks may not be around tomorrow. Disease may be detected sooner, or potentially prevented all together through a series of proactive micro-interventions. If this happens, consumers might want insurance products tailored to their risk profile, as driven by their lifestyle and behaviors, as opposed to those designed for a broader population which is the case today.

"Consumers have the power, and desire, to demand more personalized care from their provider — care that looks at their medical history compared to the social realities of their specific situation and lifestyle," Neal Batra, principal of Deloitte Consulting and Deloitte's life sciences and healthcare practices, said. "We expect these empowered consumers will reward organizations that are focused on keeping them healthy. Those organizations that respond by personalizing healthcare in ways that are scalable to large populations can enable better outcomes at a lower cost and can realize the promise of a future that puts well-being at the center, eliminates waste from our healthcare economy and uses a significant well-being dividend to better our society as a whole."

Recent Videos
Jill Zouzoulas, MD, FACR, an expert on biologic therapies
Lawrence Eichenfield, MD, an expert on atopic dermatitis
Video 5 - "Obstacles in Adapting Diabetes Technology to Individual Needs" - 1 KOL is featured
Lawrence Eichenfield, MD, an expert on atopic dermatitis
Lawrence Eichenfield, MD, an expert on atopic dermatitis
Video 4 - "The Impact of Continuous Glucose Monitors & Digital Solutions on Diabetes Care"
Video 3 - "The Pivotal Role of Patient Engagement and Education in Achieving Optimal Diabetes Outcomes"
Related Content
© 2024 MJH Life Sciences

All rights reserved.