Health Care Spending – Where are We Now?

Health care spending is a hot topic and rightfully so as trillions of dollars are spent on this industry annually.  In fact, annual healthcare spending has grown at a pace more rapid than GDP growth has occurred historically.       

However, according to the most recent Centers for Medicare & Medicaid Services (CMS) report, national health expenditures in 2010 are projected to have reached $2.6 trillion and grown 3.9 percent.  This is actually down from a 4.0 percent growth in 2009.  What could be the cause for a slowdown in healthcare spending?  Is it the economic recession of recent years or the results of public and private efforts to control spending?  Regardless of this answer, the fact still remains that current spending is too high and must be addressed.

So how can the healthcare spending trend be curved to contain costs to avoid spending an estimated $5 trillion on healthcare services in 2022?  One option, although not a popular one, is rationing healthcare services.  This would be accomplished by reducing benefits and increasing cost-sharing with patients.  Another more popular option is changing the way in which providers of healthcare services are reimbursed. 

Currently providers are reimbursed on a fee-for-service system in which monies are paid for volume of services performed rather than value.  Shifting the reimbursement model to pay for value of services provided rather than volume would hopefully result in better outcomes and less dollars into the system.  Additionally, looking at payment arrangements in which risk is shared between payers and providers is another trend that has gained momentum from government and commercial payers.  Tack on utilizing readily available health information, care coordination, accessible primary care services and an engaged patient and you have the content for my next blog post! Stay tuned.