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At the intersection of health, health care, and policy.

Last Build Date: Fri, 02 Dec 2016 19:05:41 +0000


National Health Spending Grows Faster In 2015

Fri, 02 Dec 2016 19:05:41 +0000

A new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS), published as a Web First by Health Affairs, estimates that in 2015 health care spending in the United States grew at a rate of 5.8 percent and reached $3.2 trillion, or $9,990 per person. In 2014 spending increased 5.3 percent, which followed five consecutive years of historically low growth from 2009 to 2013. Faster growth in 2014 and 2015 occurred as Affordable Care Act (ACA) provisions expanded coverage for individuals through Marketplace plans and the Medicaid program. Share of Gross Domestic Product Increases to 17.8 Percent Health spending’s share of the nation’s gross domestic product (GDP) was 17.8 percent in 2015, up from 17.4 percent in 2014. Coverage expansions that began in 2014 as a result of the ACA helped increase the percentage of the population with health insurance from 86.0 percent in 2013 to 90.9 percent in 2015.  This expansion of coverage continued to affect health spending growth in 2015. Faster growth in total health care spending was primarily due to accelerated growth in spending for private health insurance (7.2 percent), hospital care (5.6 percent), and physician and clinical services (6.3 percent). While Medicaid spending and retail prescription drug spending grew at a slower rate than in 2014, continued strong growth in both contributed to overall health care spending growth in 2015. On a per capita basis, national health spending grew at 5.0 percent, reaching $9,990 in 2015. Changes in the age and sex mix of the population accounted for 0.6 percent of the growth in per capita health spending. Increases in medical prices and residual use and intensity of health care goods and services accounted for 1.2 percent and 3.2 percent of the growth, respectively. Health Spending Projected to Increase “Over the last fifty-five years, the largest increases in health spending’s share of the US economy have typically occurred around periods of economic recession,” said Anne B. Martin, an economist in the CMS Office of the Actuary and first author of the Health Affairs article. “While the 2014 and 2015 increases occurred more than five years after the nation’s last recession ended, they coincided with 9.7 million individuals gaining private health insurance coverage and 10.3 million more people enrolling in Medicaid coverage. An additional contributing factor is the rapid growth in retail prescription drug spending.” While 2014–15 is unique given the significant changes in health coverage that have taken place, health spending is projected to increase as a share of the overall economy in the decade ahead. It will be influenced by the aging of the population, changing economic conditions, and faster medical price growth. This study will also appear in the January 2017 issue of Health Affairs. [...]

Barriers To Change: The View From Berlin

Fri, 02 Dec 2016 16:43:32 +0000


For the past two years, Health Affairs has published blog posts arising from the Center for Healthcare Management’s forums, held in Berlin. These events are unlike a typical conference — more conversation than presentation, and more participation by various actors in the health care sector than discussion of a single topic. An excellent summary of the entire event can be found here.

Why Is Change So Slow?

The same question bedeviled the attendees as challenges all who are interested in improvement in the health sector: If the distance between the value we obtain from our health care investment and what we receive for that investment is so apparent, why is the system so resistant to change?

In remarks at the forum, Sherry Glied, Dean of the NYU Wagner School of Public Service, suggested three barriers: focus, politics, and inertia. Her blog post presents some of her thoughts regarding focus. In essence, the concentration of high medical costs among a very small segment of the population makes risk avoidance a viable business model when compared to the difficult work of actually redesigning how health care is delivered so it is more efficient. While she acknowledges steps that have been taken to reduce the rewards for avoiding risk, she argues that additional steps are needed to help shift the focus.

Bearing Risk As A Motivation For Change

Bruce Fried had a more optimistic perspective on risk, arguing that the evolution of payment toward value-based methods, while very complex for health care organizations to handle, is the largest driver of change in the health care system today. Fried describes this view.

Frank Maddux discussed that very challenge for an organization transitioning from providing dialysis to caring for the entire person with kidney disease.

Other participants in the forum examined the problem of lack of focus from a different perspective. Many attendees were from organizations that have made significant efforts to improve care, only to find that the business model doesn’t support the changes they have put into place. No matter how much policymakers and payers say they want the delivery system to focus on improvement, it’s hard to do so when their payment policies don’t align with their words.

The Role of Politics

Glied’s second point was about politics — a particularly interesting topic at a global forum where the political systems and imperatives were so variable among the attendees. Yet, the theme of politics as an impediment to change was always there. For example, Peter Homberg described how the regulatory regime in Germany causes delays in introduction of pharmaceuticals due to that country’s pricing policies.

Liz Fowler noted that the move toward value may be global, but how value is defined varies substantially around the world.

No matter the country, those who are delivering care have a stake in continuing to do things pretty much the same way. Whether it is through protecting existing payment streams or challenging regulations that implement a change, the health care sector seems able to use the political process to impede the pace of delivery system change.

The Problem of Inertia

And then there is inertia. From one perspective, inertia is simply the sum of a lack of focus and entrenched politics. In this view, inertia is the embodiment of resistance to change. But Martine Bellanger suggested another view of inertia: as the source of unhappiness in health care. Unhappiness by workers, trapped in organizations, burdened by rules and regulations, saps the energy needed to effect real change.

A Problem of Management?

If politicians say they want better value, payment policies are shifting toward value, and health professionals want to provide value, why are we moving so slowly? Perhaps because we rely so heavily on management as the mechanism for translating these incentives into action. Consider the growth of physicians and administrators in the US from 1970 to 2009, shown here.


Returning to Sherry Glied’s remarks and suggestions, it strikes the external spectator that the system might have created its own slack by subscribing to complex management approaches, refining and implementing incentives without much evidence of added patient value. As clinicians view themselves as subject to management controls, they lose their sense of purpose.

In the end, change occurs because motivated and creative people push themselves and their organizations to do something different from what is expected of them. Policies and politics lag change; they don’t lead it. The challenge for health care is to liberate and energize those with the vision and resources to make improvements and hope that their leadership will change the context for the rest of the system’s actors, who will follow, hopefully happily, as their view of what is possible is reshaped by the vision of the leaders.

It remains to be seen whether proper and purposeful management will be aligned with medical care of the 21st century. The system’s ability to exist and persist as it is seems to be the most powerful force opposing change.