This repost from The Incidental Economist (TIE) is one of the best summaries of US Health Care I have seen. I also appended the Uwe posting at the bottom.

(The JAMA Authors are Hamilton Moses III, MD; David H. M. Matheson, MBA, JD; E. Ray Dorsey, MD, MBA; Benjamin P. George, MPH; David Sadoff, BA; Satoshi Yoshimura, PhD

The JAMA Article, which has an abundance of tables, references and graphs, will be on my MA and Ph.D. reading lists.

Anyone interested in keeping up with current US health policy from an economists point of view should subscribe to TIE, although it can be distracting, frustrating, and time consuming.

Randy

Study:The Anatomy of Health Care in the United States

Posted: 13 Nov 2013 03:55 AM PST

From JAMA. I reformatted the abstract, and broke it up into paragraphs to make it easier to read:

Health care in the United States includes a vast array of complex interrelationships among those who receive, provide, and finance care. In this article, publicly available data were used to identify trends in health care, principally from 1980 to 2011, in the source and use of funds (“economic anatomy”), the people receiving and organizations providing care, and the resulting value created and health outcomes.

In 2011, US health care employed 15.7% of the workforce, with expenditures of $2.7 trillion, doubling since 1980 as a percentage of US gross domestic product (GDP) to 17.9%. Yearly growth has decreased since 1970, especially since 2002, but, at 3% per year, exceeds any other industry and GDP overall.

Government funding increased from 31.1% in 1980 to 42.3% in 2011. Despite the increases in resources devoted to health care, multiple health metrics, including life expectancy at birth and survival with many diseases, shows the United States trailing peer nations. The findings from this analysis contradict several common assumptions. Since 2000,

1. price (especially of hospital charges [+4.2%/y], professional services [3.6%/y], drugs and devices [+4.0%/y], and administrative costs [+5.6%/y]), not demand for services or aging of the population, produced 91% of cost increases;
2. personal out-of-pocket spending on insurance premiums and co-payments have declined from 23% to 11%; and
3. chronic illnesses account for 84% of costs overall among the entire population, not only of the elderly.

Three factors have produced the most change:

1. consolidation, with fewer general hospitals and more single-specialty hospitals and physician groups, producing financial concentration in health systems, insurers, pharmacies, and benefit managers;
2. information technology, in which investment has occurred but value is elusive; and
3. the patient as consumer, whereby influence is sought outside traditional channels, using social media, informal networks, new public sources of information, and self-management software.

These forces create tension among patient aims for choice, personal care, and attention; physician aims for professionalism and autonomy; and public and private payer aims for aggregate economic value across large populations. Measurements of cost and outcome (applied to groups) are supplanting individuals’ preferences. Clinicians increasingly are expected to substitute social and economic goals for the needs of a single patient. These contradictory forces are difficult to reconcile, creating risk of growing instability and political tensions. A national conversation, guided by the best data and information, aimed at explicit understanding of choices, tradeoffs, and expectations, using broader definitions of health and value, is needed.

My frustration? That anyone treats any of this as news. At some point we need to stop diagnosing the problem and start doing something about it.

The whole thing is worth a read. But none of it will be news for regular visitors to TIE. Why isn’t everyone reading this blog already?!?!?!

@aaronecarroll

Quote: Uwe (Need I say more?)

Posted: 13 Nov 2013 04:00 AM PST

[T]he often advanced idea that American patients should have “more skin in the game” through higher cost sharing, inducing them to shop around for cost-effective health care, so far has been about as sensible as blindfolding shoppers entering a department store in the hope that inside they can and will then shop smartly for the merchandise they seek. So far the application of this idea in practice has been as silly as it has been cruel. […]

In their almost united opposition to government, US physicians and health care organizations have always paid lip service to the virtue of market, possibly without fully understanding what market actually means outside a safe fortress that keeps prices and quality of services opaque from potential buyers. Reference pricing for health care coupled with full transparency of those prices is one manifestation of raw market forces at work.

–Uwe Reinhardt, The Journal of the American Medical Association. I thank Karan Chhabra for the prod.

@afrakt