Managed Care - May 2008 - (Page 22) in there with a strategy, either a market-based or a regulatory strategy.” Gail Wilensky, who ran Medicare and Medicaid in the early ’90s, is also worried. “I don’t want to go so far as to say we can’t slow it down, but we have a very long history now of spending growth rates that substantially exceed the rest of the economy,” she says. The one exception has been a few years in the 1990s, a time when insurers were taking aggressive action against costs and the Balanced Budget Act put a brake on Medicare. Looking back over the past half century, though, that 2 percent to 2.5 percent rise in spending over GDP has been a constant. “That really is the story,” says Wilensky, “and what that means is that to have a different outcome will require putting in motion a number of different forces and recognizing that when you’re trying to get off a historical growth trend of a very long duration, it’s not going to be easy.” Adds Weems, “I don’t think it will continue. I don’t think it can continue.” Maybe after four or five years, he says, the numbers might add up to an unavoidable call for urgent action. Others say the rise in spending has already hit the boiling point. Pharmacy costs from here to 2017 “We’re no longer dealing with just the health care issue; we’re now dealing with an The recent slowing in the rise of drug costs might not last for long. It happened because the FDA’s approval of new issue that’s creating a major national ecochemical entities has dropped at the same time that blocknomic crisis,” says Henry Simmons, MD, buster drugs are losing patent protection. As new biologics president of the National Coalition on gain approval, that trend could be short-lived. Health Care — a who’s who of Fortune 500 In 2005, specialty pharmaceutical spending accounted executives, politicians from both parties, and for nearly 10 percent of total pharmacy spending, up from other high-profile figures. “Health care 5.6 percent in 2003, according to “Drug Trend Report 2006: spending has an impact on jobs, pension adPersonalizing Healthcare,” from Medco Health Solutions. equacy, international competitiveness, and Projected expenditures for prescription drugs more. This is a huge monster with ramificaand sources of payment (billions) tions way beyond what much of the debate focuses on now — the impact of health care $600 costs.” Every year that slips by without an effective antidote ratchets up the pressure. $500 Expenditures “Taking measures now would be easier than measures in five or six years,” Weems of$400 fers. However, several of the numbers experts say there’s no reason to believe that anything significant will happen in that time. $300 Total private $200 Insurance Total public Medicare $100 0 2007 2009 2011 2013 2015 2017 Note: “Insurance” is a subset of “total private” and “Medicare” is a subset of “total public.” “Expenditures” is the sum of “total private” and “total public.” Source: Centers for Medicare & Medicaid Services, Office of the Actuary Something has to give For an actuary, it’s clear that the way health care is delivered in America — the make and model of a system built over decades — is designed for steady acceleration. Many of the new programs aimed at slowing it down will have no more effect than a gentle breeze. “We have an economic model where the people doing the demanding are not the people paying,” says Bob Tate, chief actuary in the health management consulting practice of Hewitt Associates. “And the people doing 22 MANAGED CARE / MAY 2008
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