[EQ] High and rising health care costs: Demystifying U.S. health care spending

High and rising health care costs: Demystifying U.S. health care spending

 

Paul B. Ginsburg, President, Center for Studying Health System Change

THE SYNTHESIS PROJECT - RESEARCH SYNTHESIS REPORT NO. 16 - OCTOBER 2008

 

Available online as PDF file [32p.] at: http://www.rwjf.org/files/research/101508.policysynthesis.costdrivers.rpt.pdf

 

Why is this issue important to policy-makers?

- In 2006, the United States spent $2.1 trillion, or 16 percent of gross domestic product (GDP), on health care.
  This translates to $7,026 per person annually   (Reference 1).

- U.S. spending on health care is greater than that of any other developed country, yet unlike other countries, which provide near-universal coverage,
  16 percent of Americans are uninsured (Reference 2).

-  Without steps to restrain growth, increases in health care spending will eventually consume almost the entire GDP.

 

Policy-makers have a number of options available to restrain health care spending growth, none of which are easy. With research consistently showing that medical technology is the largest cost driver, applying technology more selectively to patients needs to be an element of any long-term approach.

 

To accomplish this, policy-makers could:

·         Increase funding for research on effectiveness. This is the beginning of an approach that supports the appropriate application of medical technology to the patients likely to receive the highest benefit.

·         Reform provider payment systems. Distortions between payments and costs of services lead to undesirable provider incentives to emphasize the most profitable services. These unintended incentives tend to favor services incorporating new technologies.

·         Increase use of consumer financial incentives and support. To the degree that consumers bear some of the financial risk of medical spending, they are likely to be judicious concerning the use of technologies with low value to them as patients. For this to work as intended, however, patients must be provided information on treatment alternatives and their effectiveness, and on the quality of different providers of care, and must face incentives to favor more effi cient providers. Use of this approach is limited by the need to maintain adequate financial protection for the costs of illness or injury.

 

Content:

- Introduction

- Findings

- Implications for Policy-Makers

- The Need for Additional Information

- Appendix I References

 

Policy brief: http://www.rwjf.org/files/research/101508.policysynthesis.costdrivers.brief.pdf

 

 

 

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