U.S. Health Spending Again ‘Skyrocketing,’ NEJM Policy Series Says

While health care costs in the United States remained under control during the mid-1990s, the nation "once again" faces "skyrocketing" medical expenses, which may prove "extremely difficult" or "impossible" to curb, Massachusetts General Hospital's Dr. David Blumenthal argues in the second installment of the New England Journal of Medicine's Health Policy 2001 series. According to HCFA projections, Blumenthal writes, health care spending will climb 6.8% each year until 2008, topping off at $2.2 trillion, up from $1.2 trillion in 1999. Although managed care helped control spending in the 1990s, Blumenthal points out that MCOs have lost their "potency" in the face of "resistance" from patients and providers. He adds that insurers' "underwriting cycle," which underwent a slowdown in the early 1990s when increased competition lowered premiums, has taken a "recent upturn" and boosted "inflationary pressures." In addition, the costs of new technology, biomedical research and prescription drugs also have also helped to "drive up spending," Blumenthal writes. He also argues that the "sheer numbers" of the country's aging population, as well as a growing "national prosperity, will "almost certain[ly]" prompt "substantial" increases in health care spending.

No Return on Investment?
According to Blumenthal, much of the increased spending "may be wasted," because there is "no conclusive evidence" that the United States has better health outcomes than other industrialized nations. He also points out that the United States lacks "any effective means" to control health care spending and "consequently encourages excessive outlays." In addition, he contends that increased health spending "inexorably swell[s] the ranks of the uninsured," with employers reducing health benefits in the face of rising costs.

Paths to Reform
To help control health care costs, Blumenthal suggests employing defined contribution plans, medical savings accounts or increased co-payments and deductibles, noting that managed care failed to curtail spending because patients "never had to pay" the "true price" of services -- while employers paid a "substantial" share of premiums. However, he warns that such a plan has "never been tested" on a national scale and could increase the "inequities" between affluent and lower-income patients. Blumenthal also recommends government price controls to help curb health care spending, although he admits that no "political will" exists for such a plan. He adds that government controls tend to lead to "longer waits" for elective procedures and "reduced availability" of new treatments and services.

A 'Forbidding Challenge'
While Blumenthal argues that "[b]lunting" increased health care spending will require "potent countermeasures" supported by a "solid political consensus," he concedes that such reforms face "substantial barriers," have "uncertain" effectiveness and often pose "serious adverse affects" that would short-circuit the "political will required to sustain them." Still, he urges policy makers to treat the issue as a "high priority" and to educate the public about the dangers of increased health care spending, concluding, "Generating the political will necessary to address both these problems is a forbidding challenge" (Blumenthal, New England Journal of Medicine, 3/8).