Transcript Document

Will The Limited Growth In
Healthcare Cost Continue?
Stuart H. Altman
Chaikin Professor of Health Policy
Heller School for Social Policy and Management
Brandeis University
Yes--Healthcare Spending
Growth Nationally Has
Slowed
But Will It Continue?
Average Annual Percent Change in National
Health Expenditures, 1960-2012
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary,
National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by
type of service and source of funds, CY 1960-2010; file nhe2010.zip).
So How Are We Doing
In Massachusetts?
Personal Health Care Expenditures In
Massachusetts and U.S. Relative to Economy
(Percent of GDP)
Massachusetts Health Policy Commission, 2013 Cost Trends Report, December 2013
And Slowdown
Continued In 2013!
Similar To What Is
Happening Nationally
So---Where Do We
Go From Here?
Medicare Actuaries Think
Limited Growth Will Return
As a Result of An Expanding
Economy and Aging Medicare
Recipients
Growth In Yearly Healthcare Spending
Actual (2012-2014) and Projected (2015-2019)
Most Growth From Medicare
and Medicaid Spending
Increases!
Even For Medicare Most of Growth
The Result Of More Care for Older
Patients
Growth in Health Care Spending By Payer:
Actual 2012-2014, Projections 2015-2019
Source: Office of The Actuary, CMA , September 2014.
But--- Actuaries Expect
Private Insurance Spending
Growth Rates To Stay
Constant
This May Occur But Not
Without a Fight!
WHY---
In The Past---Most Hospitals Able to
Make-Up Shortfalls From Lower
Government Payments and
Uncompensated Care By Higher
Payments From Pvt. Patients
Private Insurance Payments Used to Pay for Lower Government Payments
But What About The
Future?
With Government Patients a Larger
Component of Total--- Greater
Pressure on Pvt. Insurance to MakeUp for Shortfall
Growth in Enrollment by Payer Source,
2006 - 2022
CMS, National Health Expenditure Projections, 2012 to 2022, January 2013.
Total Health Insurance Payments by Payer
Source
2006 versus 2022
(Percent of Total)
60%
51.7%
48.7%
50%
43.2%
2006
46.7%
2022
40%
26.5%
29.6%
30%
20.2%
22.1%
20%
10%
0%
Private
Govt. Total
Govt. (Medicare)
CMS, National Health Expenditure Projections, 2012 to 2022, January 2013.
Govt. (Medicaid)
But Private Payments Would Need To Grow
Substantially To Maintain Hospital Margins
I Don’t Think You Will or
Can Let That Happen!
The Push Back By Employers,
Employees and Individuals
Will Be Too Strong!
In The Past Hospital Spending
Driven More By Cost of Care
(Reimbursement Model)
In The Future Cost of Care Likely
To Be Driven More By Spending
Limits (Payment Model)
Hospitals Are Responding
To New Reality---
Hospital mergers are on the rise again
24/37
In Reaction---Federal and
State Anti-Trust Activities
are on The Rise---
Courts have sided with federal
antitrust enforcers in recent years
FTC victories in past 6 years:
• General-acute care hospital mergers
–
–
–
–
Innova – Prince William (Virginia)
Rockford – OSF Healthcare (Illinois)
ProMedica – St. Luke’s (Ohio)
Capella - Mercy (Arkansas)
• General acute care-specialty hospital mergers
– Reading Health System – Surgical Institute of Reading
• Physician mergers
– St. Luke’s – Saltzer Medical (Idaho)
Several State Attorney Generals Have Imposed Conduct
Remedies on Big Hospital Systems
26/37
But---Use of Ant-Trust
Authority is Expensive and
Difficult---We Have Seen It In
Action
Limited Antitrust Actions In
Healthcare
28/37
What Is Massachusetts Doing To
Help Providers Adjust To This
New Reality
Chapter 224 a Major
Advance
Health Policy Commission
• Financially Support Restructuring of
Community Hospitals
• Certify ACO and Patient Centered
Medical Homes
• Help Providers That Wish To Take Risk on
Lowering Costs
• Work With Other State Agencies To
Assess Adequacy of Delivery System
Brandeis University
30
Government Can Help--- But It’s
Weapons are Limited Too!!!
HPC Has Some Authority To Pressure Providers
and Payers To Make System More Efficient and
Lower Premiums---But Major Option is AntiTrust Restrictions?
But What About Rates--- That’s
the Job of The Market
Are Current Low Rate Increases
Being Influenced By Added Patient
Revenues from The Affordable Care
Act?
Will This Continue In The Future
or Do We Need Stronger Market
Forces?
To Make Markets Work--We Need Both Supply Changes (New
Delivery and Payment Systems
And
Demand Changes (Benefit Design
and Limited/Tierd Networks
You Know What To Do on
Benefit Design and Tierd
Networks--But To Help Change The Delivery
System You Must Help Change The
Payment System That Provide
Needed Incentives