Managed Care - May 2008 - (Page 20) EXPLOSIVE NUMBERS In 2006, health care spending averaged $7,026 per person. By 2017, that will shoot up to $13,101. By John Carroll Contributing Editor The rise in spending has fed a growing demand for cost-control tools, creating an industry of disease management companies, consumer-directed health plans, quality initiatives, wellness programs, and more. All of those measures are still works in progress, but nothing has significantly blunted the spending increases. In fact, the single biggest recent reduction has come in pharmaceuticals, for the simple reason that the FDA’s approval of new chemical entities has dropped just as drugs are losing patent protection. The decline in new drug approvals hasn’t resulted from a lack of trying, and as new biologics gain approval, that trend could be short-lived. The key statistic for economists, though, is the relentless way that spending growth has consistently outpaced growth in the country’s GDP. hree-alarm warnings about the rise in health care spending have become routine in Washington D.C., yet, they rarely linger past the 24-hour news cycle. When government officials at the Department of Health and Human Services rolled out the latest numbers on the looming financial showdown, Kerry Weems, acting administrator of the Centers for Medicare & Medicaid Services, saw the headlines die down fast. “After the trustees report, there was a day of talk and that was it,” says Weems. “Congress won’t act on our budget” and the political system won’t respond to the Bush administration’s bitter recipe of cost control proposals for those two federal health programs. What isn’t dying down, say a lineup of acMeltdown ahead? tuaries and economists, is the rate at which There have been fluctuations in the nothealth care spending is growing. quite-parallel trend lines of rising health For the past three decades, according to care spending and GDP growth, says Stuart CMS actuaries, health care spending in the Altman, PhD, a health care economist and United States has on average grown 2.7 perdean of the Heller School at Brandeis Unicentage points faster than gross domestic “Wellness programs versity. product. In each of the past five years, are not real,” chuckles “Some experts predicted we’d reach Stuart Altman, PhD, spending on health care has jumped an av- discussing some meltdown when the health care industry erage of 6.8 percent, barreling ahead of in- things that have been hit 10 percent of GDP. Now people are sayflation even as government economists out- tried to control costs. ing we’ll hit 18 percent or 20 percent and the lined a small but significant decline in the The jury’s still out on system will just melt down,” says Altman. DM, he adds. average income of middle class families. “Sitting behind that is the fear that MediMedicare, which annually sifts through the care will just run out of money. numbers to deliver its report card, sees the past “Either this 2 percent [gap between spending predicting the future, with spending jumping 6.7 growth and GDP growth] is inevitable and any atpercent per year until 2017 as health care costs baltempt to move us off that trend line is bound to fail loon from $2.1 trillion in 2006 to $4.3 trillion. or we lack the political and staying power to force In 2006, health care spending averaged $7,026 us off, and I think the latter is the case,” says the per person. By 2017, that number should shoot up economist. “There are forces that are fairly powerto $13,101, accounting for 20 percent of GDP (this ful pushing in on a 2 percent basis, but we could go year, it’s estimated at 16.3 percent of GDP). off that trend line. It requires a willingness to hang T 20 MANAGED CARE / MAY 2008
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