Up, Up, Up

Here’s a shocker: health care spending increased in 2007.

What matters, at this point, is what effect the deepening recession will have on spending in 2009 (and had in 2008).  Delivery system job cuts and reduced drug spending (down big) are likely indicative of a tough 2009 (duh.).

The good news from the “U.S. health system” level (and it’s hardly good news) is that outlays increased slightly slower in 2007 than in 2006 (6.1 percent vs 6.7 percent respectively), much of the slow down is attributable to reduced prescription drug demand.  The other side: health care costs grew faster than wages and and GDP. Health care now consumes 16.2 percent (up from 16 percent in 2006) of our nation’s entire gross domestic product.  The dollar figure is a cool $2.2 trillion or $7,421 per person.  Government spending on health care also increased.

Here’s how some media outlets covered the news (updated throughout the day):

Spending on prescription drugs slows USA Today

Health-Care Outlays Climb at Slowest Rate in Years Wall Street Journal

Spending Rise for Health Care and Prescription Drugs Slows The New York Times

Nation’s health spending rises, but not so much Associated Press

Healthcare spending in U.S. slows Los Angeles Times

Health Spending Continues To Explode Forbes


Yesterday, CMS and Health Affairs published an analysis of the growth of U.S. health care spending through 2017.  In one word: Up.

Covered here by the WSJ Health Blog, go here for the AP string.

$4.3 trillion is the expected amount that we, as a country, will spend on health care in 2017.  That’s only slightly more than double what we spent in 2006, $2.1 trillion.

The big point:

“As a percentage of gross domestic product, known as GDP, health care spending is projected to increase to 16.3 percent in 2007 from 16.0 percent in 2006.  By the end of the projection period, health care spending in the United States is expected to reach just over $4.3 trillion and comprise 19.5 percent of GDP. ”

Forgive me for addressing the elephant in the room, but where is an extra $2.2 trillion going to come from?  Listen/read/watch anything on health care  and you are sure to hear about our unsustainable spending habits.

Add this: the report doesn’t take into consideration the possible increased role of government through health care reform, ala Barack and Hillary.  John McCain’s plan gets at reform a bit differently.  Regardless of the direction we, as a country decide to go, I’ve realized that health insurance reform addresses a piece of the puzzle, it will not be the elixir that cures all.

Further, a component of all plans is the promotion and utilization of preventive care.  While the benefits are good for public health, a report in the New England Journal of Medicine recently said, “Sweeping statements about the cost-saving potential of prevention, however, are overreaching. Studies have concluded that preventing illness can in some cases save money but in other cases can add to health care costs.”

Quite the predicament in which we find ourselves.

Here’s an interesting post on learning from another industry.  After reading “Will Disruptive Innovations Cure Health Care?” in the Harvard Business Review (if you have access to HBR, it’s worth the read) by Christensen, Bohmer, and Kenagy, I’m beginning to think we just need to start over, completely.

Retail clinics may be a start down the right path; however, whether they will work (as in accepted) or not is still up for debate.  But the thinking is right on cue.  A bill of $4,300,000,000,000.00 leaves nothing sacred.  We can choose to change, or be forced.  The time to act is now, you can be the solution, any ideas?