Brookings: Technology will fuel increased healthcare spending

Expensive technology is the factor most likely to drive healthcare spending in the coming years, according to a Brookings Papers on Economic Activity analysis published this month.

Neither the recession; the Affordable Care Act, which hasn't kicked in yet; nor changes in reimbursement fully explain the slowdown in healthcare spending, it says.

The authors, from Harvard University and Dartmouth College, predict that healthcare costs will grow at gross domestic product plus 1.2 percent for the next few decades, a rate they characterize as "still on track to cause serious fiscal pain for the U.S. government and employees who bear the cost of higher premiums in the form of lower wages."

They found that health plans that require patients to pay more out of pocket contributed to the slowdown. Such plans have helped insurers hold the line on utilization, but prices increased anyway.

Out-of-pocket spending per person was $768 in 2012, an increase of 4.8 percent, the Health Care Cost Institute (HCCI) reported recently.

During the recession, the Brookings paper points out, Medicare held the line on prices, but with high utilization, costs grew anyway. And Medicaid controlled both, but states are expanding the number of people being covered, so costs will increase.

Meanwhile, despite the number of hospitals adding proton-beam cancer treatment, the Brookings authors predict insurers may refuse to pay for such expensive technologies without evidence that patients fare better than with more traditional, less-expensive therapies. Blue Shield of California has already made that move.

The U.S. spends the most per capita on healthcare across all countries but ranks last among Britain, Canada, Germany, Netherlands, Australia and New Zealand for improving healthcare outcomes, a recent study published in Journal of the American Medical Association found.

Yet no one wants to control costs to the point of stifling innovation. As a Bloomberg writer this week put it, "We have the tools to make ourselves healthier--and presumably, more tools mean more health! But for health wonks, it means that we have to sit down and look at some unhappy trade-offs."

To learn more:
- find the report (.pdf)
- here's the Bloomberg commentary

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