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In May, President Barack Obama and U.S. healthcare policy makers met with prominent hospital administrators, physicians, drug makers, device makers, insurers, and labor leaders to try to find the will to slow the growth of American public and private medical spending.
Those at the meeting represented, as Mr. Obama noted, “different constituencies with different sets of interests. They've not always seen eye to eye with each other or with our government on what needs to be done to reform healthcare in this country.” “We are determined to work together to provide quality, affordable coverage and access for every American.… We believe that the proper approach to achieve and sustain reduced cost growth is one that will: improve the population's health; continuously improve quality; encourage the advancement of medical treatments, approaches, and science; streamline administration; and encourage efficient care delivery based on evidence and best practice.”
—Healthcare leaders' letter to President Obama, May 11, 2009 (1)
The challenge is not to reduce healthcare costs, but just to reduce the rate of growth, currently projected at about 6.2% per year over the coming decade (1). According to the International Monetary Fund, the U.S. Gross Domestic Product grew by an average of about 2.9% per year from 1991 through 2007 (well ahead of most of the rest of the world). In 2008, despite the financial meltdown, the American economy grew by 1.1%. In 2009, GDP should drop by 2.8%, remain flat in 2010, and work its way up to 2.6% annual growth in five years (2).
Clearly, healthcare costs will continue to grow much faster than the economy. Medical expenses, public and private, account for 17.6% of today's GDP. A 6.2% annual increase would take that proportion to 20.3% in 2018.
The U.S. administration now aims to slow the growth rate by about 1.5%—to the neighborhood of 4.7%. Healthcare costs will still grow faster than the general economy, but the disparity will be smaller.
In their pledge of support to the slower-growth goal, healthcare leaders proposed to economize by (i) simplifying and standardizing administration; (ii) reducing both over- and under-use of healthcare; (iii) encouraging coordinated care; (iv) promoting evidence-based best practices; and (v) reducing costs via “common-sense improvements” in delivery models, health information technology, workforce, and regulatory reforms.
Mr. Obama called the meeting “extraordinarily productive” and the participants “essential to the work of health care reform in this country.”
It seems logical that better management, more rational treatment, and better science can help us spend our medical dollars better.
Yet even if we succeed in all of these pursuits, can we really hope to cap healthcare spending? Or will healthcare spending necessarily grow as science expands our power to heal?
Illnesses we once thought of as single entities have fragmented into dozens or hundreds of separate conditions, each distinguished by its own biomarkers, prognoses, and treatments. We discover new therapies and preventives for each condition. Medicine extends our lives, and with the extended years often come additional ills.
In short, our “treatment space” is spreading continually on three axes—number of conditions, treatments per condition, and conditions per patient. And so, of course, we spend more on treatment. The real question isn't how much we spend, but how much we get in return. If more money brings more health (a separate analysis), what choice do we have but to spend more? What—after air, water, food, shelter, and family—is a better investment?
