Managed Care - May 2008 - (Page 23) the supplying are supplying as much as they feel “when in fact it’s mostly the rate at which health they can. That model is probably the main driver care costs grow.” behind why the numbers are so consistent.” To try to gain a measure of control, companies Crisis or not? have struck back with disease management proCMS’s latest prediction is “actually a fairly optigrams, wellness initiatives, and more. While indimistic projection,” says Paul Ginsburg, PhD, presvidual employers may influence their own island of ident of the nonpartisan Center for Studying numbers, the changes aren’t slowing the nationwide Health System Change. “I looked at the difference cost trend. between the trend of GDP and health spending, Says Tate: “I haven’t seen a lot of direct evidence which is 2.5 percent over a long historical period, of things that will successfully affect the spending and the latest [CMS] forecast is 1.9 percent. That’s trend over the next four or five years.” optimistic. It’s hard to get a sense of why they’re Just after Tate started focusing his actuarial talprojecting it to be lower than it has been. It’s hard ents on health care in 1994, there was a period of to imagine, without some really substantial change, several years when health care spending shifted it coming in that much lower.” into a lower gear. MCOs aggressively managed It’s easy, though, for Altman to see the range costs, earning the enmity of much of the public. widening rather than narrowing over the next few The Balanced Budget Act engineered sigyears. nificant changes in the rates for Medicare “This economic downturn, if not recesservices. sion, is going to change a lot,” says Altman. “Somewhere out there in the future, so “If it lasts a long time, a recession will do our entire economy does not become health two things: The percentage of GDP going to care, there’s another event like that, probahealth care is going to shoot up, even withbly more than one,” says Tate. “We can’t out spending growth, and there will be an keep going like this forever. Until then, it increased number of uninsured.” seems like something has to give at some The debate over health care will heat up point. The problem is that we haven’t any even more. “We’ll be saying ’no’ idea of what that is. “I would have thought serious reform more often,” predicts “There is a limit to how much of the Paul Ginsburg, PhD. would be pushed to 2012,” he adds, but a reeconomy can be taken up by health care,” he There will need to be cession could accelerate a showdown to adds. “But we don’t know what that limit is. distinctions made be- next year. Right now, at 16 percent of GDP, we don’t tween what works Uwe Reinhardt, PhD, a prominent health seem to have hit that threshold. As a nation, and what only has care economist at Princeton, takes a somewe continue to spend on new electronic marginal benefit. what contrarian view. gadgets, fancy cars, and video games. On a “The nation could afford 20 percent of macro level, we aren’t seeing our spending on these GDP,” he says. “Even if we spent 20 percent of GDP types of goods deterred by what we’re paying for on health care, non-health GDP will still be so health care. It can get bigger; we just don’t know much larger we can afford to absorb it.” how much bigger.” Project the numbers out to mid-century, when Peter Orszag, director of the Congressional health care spending would be 40 percent of GDP, Budget Office, has become so alarmed by the and it’s still theoretically possible. The other 60 spending trend that he has mounted a virtual crupercent of GDP would represent a much larger sade to highlight how the rising cost of health care economy that could still provide much of what we presents the country’s biggest fiscal challenge. He’s consume today. adamant that much of the policy discussion so far “You could, economically, afford it,” says Reinhas been simply misguided. hardt. “Of course, one should also keep in mind “We have misdiagnosed the nation’s long-term that at 40 percent of GDP, health care would be the fiscal problem and described it mostly in terms of sole economic locomotive of the economy, which aging and demographics,” he said in a recent speech, it already is today.” MAY 2008 / MANAGED CARE 23
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.