• What’s the problem? Everything!

    The Bipartisan Policy Center has released a report on factors that drive the high level of health care spending in the United States. Here are some:

    • Fee-for-service reimbursement;
    • Fragmentation in care delivery;
    • Administrative burden on providers, payers and patients;
    • Population aging, rising rates of chronic disease and co-morbidities, as well as lifestyle factors and personal health choices;
    • Advances in medical technology;
    • Tax treatment of health insurance;
    • Insurance benefit design;
    • Lack of transparency about cost and quality, compounded by limited data, to inform consumer choice;
    • Cultural biases that influence care utilization;
    • Changing trends in health care market consolidation and competition for providers and insurers;
    • High unit prices of medical services;
    • The health care legal and regulatory environment, including current medical malpractice and fraud and abuse laws; and
    • Structure and supply of the health professional workforce, including scope of practice restrictions, trends in clinical specialization, and patient access to providers.

    In other words… everything. The system is broken, huh?


    • It is a great report, but I find the terminology in their summary to be confusing, specifically the statement “driving the levels.” As Newhouse, Blumenthal, and many others have pointed out, levels of health care costs and growth of health care costs are two very separate issues. Each have different drivers and potential policy solutions. The term “driving the levels” blends the two disparate concepts. For example, high unit prices of medical services contribute to the high levels of health care expenditures in the US, whereas advancement in technology drives growth in health care expenditures. (If health care unit prices are high AND growing rapidly, which the HCCI report out yesterday suggests they are, then they contribute to both categories.) In my opinion, the issues could be made more clear by separating levels from growth.

    • Why isn’t Provider Consolidation (vertical and horizontal) and the exercising of market power on the list? Increasingly consolidated provider systems have been driving prices higher (see the recent HCCI report for 2011 – on top of evidence from the Mass AG and various other sources: AHIP reports using Thomson-Reuters and Oregon data and recent Health Affairs work by Martin et.al.). We had a respite due to the recession and the usual but temporary “atmospheric” effect of health reform, but now providers are ready to unleash their growing market power. It’s the prices stupid (has this been used before – it sounds vaguely familiar?) 🙂 Bet this “cause” will be on their list in a year or two. Any takers?