TUESDAY, Nov. 12 (HealthDay News) -- Contrary to popular belief,
the biggest reason for the rise in U.S. health care spending is not
an aging population or patient demand but rather the increasing
costs of drugs, procedures and hospital care, a new study
Researchers found that since 2000, those yearly price increases
have accounted for 91 percent of the rise in national health care
spending, which totaled $2.7 trillion in 2011.
"That was surprising," said lead researcher Dr. Hamilton Moses, of the Johns Hopkins University School of Medicine, in Baltimore. Often, he noted, people point to the aging population, or doctors ordering too many tests and treatments, as the main drivers of soaring health care spending.
"I think the origin of that misperception comes from the politicizing of the issue," said Moses, who is also chairman of Alerion Institute, a Virginia-based consulting firm.
The new study, reported in the Nov. 13 issue of the
Journal of the American Medical Association, is an attempt
to add more actual data to the debate.
In the current political climate, Moses said, "rational
discussions based on valid information" are hard to come by.
"But the fact is," he said, "we spend more on health care than other developed countries, and the U.S. still lags behind in outcomes."
Life expectancy is a case in point, Moses said. It's improving
in the United States, but not as fast as it is in other developed
The reasons for the poorer outcomes are not completely clear,
and probably complicated, Moses noted. But, he said, the bottom
line is, "U.S. patients should be demanding a much higher degree of
service than they're getting."
For the study, Moses's team analyzed a range of public data
sources to look at trends in health care spending since 1980.
What they found counters some conventional beliefs. First, price
increases have driven the increase in health care costs since 2000.
The price of drugs and devices has risen by about 4 percent a year,
on average. Hospital charges have shown a similar increase.
Meanwhile, administrative costs -- what doctors and hospitals
expend getting payments from insurers and patients -- have gone up
by nearly 6 percent each year.
And "market forces" don't come into play. "Patients never see 90
percent of these costs," Moses said, and even doctors may not know
how much a treatment costs. With medical devices, like implantable
heart devices, for example, hospitals sign confidentiality
agreements with manufacturers that prevent them from sharing price
information -- and knowing whether they are getting a good deal or
Another finding that may surprise many patients: Americans have
been paying for an increasingly smaller share of their medical care
In 2011, consumers footed the bill for 11 percent of national
health care costs (in the form of insurance premiums, co-pays and
other spending). That was down from 23 percent in 1980.
And while there is a lot of worry about the aging baby boomers
straining the health care system, right now it's not the elderly
breaking the bank. Chronic conditions among people younger than 65
-- from heart disease to high blood pressure to back pain --
account for two-thirds of health care costs, the study found.
"Chronic illness is a problem for everyone, not just the elderly," Moses said. For the general public, he added, that's another reminder to follow a healthy lifestyle to reduce your chances of developing common health problems like high blood pressure, high cholesterol and diabetes.
But no one is saying that healthy diets and exercise are going
to fix the U.S. health care problem. Whether the Affordable Care
Act will make a dent remains to be seen, Moses said.
Dr. Joshua Sharfstein, the secretary of Maryland's health
department, said it might. The law gives more flexibility to states
to find "innovative ways" to cut costs, according to Sharfstein,
who co-wrote an editorial published with the study.
In Maryland, Sharfstein said, an independent commission has been
setting hospital prices since the 1970s. And now his state is
working on a plan that would keep hospital spending from growing
faster than the economy. It's also supposed to decrease incentives
for hospitals to perform more procedures, and instead reward them
for better quality of care.
"We need to move toward incentives for efficiency," Sharfstein said.
Capping health care costs to grow no more quickly than the
economy should be a national goal, according to Dr. Ezekiel
Emanuel, chair of medical ethics and health policy at the
University of Pennsylvania, in Philadelphia.
"It would require us to stretch. It would require us to rethink the current system," said Emanuel, who also wrote a commentary in the same journal issue. But, he added, it would be "feasible" to ensure that per-person health care spending rose no faster than the gross domestic product.
Along with Maryland, Emanuel said, Massachusetts and Arkansas
have adopted cost-cutting plans with a goal like that in mind. For
it to happen on a national level, he noted, "first people have to
agree that it's a worthy goal."
How would it happen? Emanuel said that one way would be to
reduce how much care is performed in hospitals, and move it to much
less costly settings -- including people's homes.
There is a precedent to such a goal. For a few years in the
1990s, Emanuel noted, U.S. health care spending did grow at roughly
the rate of the economy. That was when managed care plans briefly
reined in spending. But doctors' and patients' dissatisfaction with
managed care's restrictions -- like prior authorization for tests
and treatments -- led to a "backlash," Emanuel said.
Still, he said he thinks lessons have been learned since that
time, and more is known now about where the key cost controls need
to be made. "I don't think we'd have the same kind of backlash,"
The Kaiser Family Foundation has more on
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