Is Healthcare Spending Finally Under Control?

A new analysis in the New England Journal of Medicine examines whether the recent slowdown in the growth of healthcare costs is due to the economic recession or cost control efforts enacted systemwide.

The paper, spearheaded by David Blumenthal, MD, president of The Commonwealth Fund and former head of the federal government's health IT agency, breaks the issue into several parts.

First, the authors explain that healthcare expenditures per capita only increased 0.8 percent in 2012, far less than the average spending growth rate over the past several decades. Some have argued the spending slowdown is due to the recession that started in 2007 — and an economy that is struggling to recover from said recession. Others have said cost control efforts, like features within the Patient Protection and Affordable Care Act, are working. The authors said it may be a combination of the two.

They wrote that during the past 50 years, new medical technologies like cardiac procedures and high-priced pharmaceuticals have been the biggest factor in the rise of U.S. healthcare costs. However, as of late, technologies are being developed at a slower rate. In addition, more people are facing more cost-sharing of their own healthcare costs, like high-deductible health plans, which encourages lower utilization. Providers are gradually working with payment reforms, like accountable care organizations and bundled payments, which have shown some potential for savings, the authors wrote. Combined, all of these factors have pumped the brakes on the U.S. healthcare system's costs.

To curb healthcare costs in the long term, the authors said healthcare and policy leaders will be faced with two broad options: healthcare rationing or discarding the fee-for-service payment system altogether. Rationing already occurs in the U.S., as the more affluent typically receive better care because they can afford it, and further rationing could occur if employers continue to reduce benefits and increase employee cost-sharing. To avoid the unsustainability and ethical issues of rationing, a full commitment to ACOs, global budgets, care coordination and value-based services may be the most important part of any solution, the authors said.

"The increasing consensus concerning these approaches to re-engineering healthcare in the United States, the awareness of savings opportunities and the threat of resumed growth in healthcare spending provide an opening for constructive, systemic reform that avoids the pain associated with healthcare rationing," the authors concluded. "Regardless of whether per capita expenses resume their prerecession rates of escalation, these opportunities are likely to stay on the private and public healthcare agenda for the foreseeable future."

More Articles on Healthcare Spending:
White House Report: Healthcare Spending Growth Rate at Record Low
Survey: Medicaid Enrollment, Spending Expected to Rise in 2014
AHA: Lower Hospital Costs Contribute to Slow Healthcare Spending Growth

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