JAMA had a great article last week on how total healthcare costs have increased over time in the United States. The short version is that it is all about the prices.
I love how Figure 3 presents the data:
We should expect to spend more money as the population increased from 1996 to 2013. This is not something I am worried about.
We should also expect to spend more money as the population ages. A simple way to stratify healthcare spending is to split the population into those who can wipe their own butts and those who can not. Those who can wipe their own butt are much cheaper to cover than those who need help. Again, this is something that makes sense to me.
We’ve gotten a little bit healthier. This lowers costs even as we get older. Not smoking is a wonderful thing.
The number services has a point estimate of leading to a decrease in costs although the margin of error does not allow us to say it is a definite source of cost decreases. We’re not using a lot more services now than in 1996.
So far, the US healthcare expenditure story is fairly straightforward, the population is a bit bigger and older and slightly healthier.
The issue is the price per service. Pricing has gone up tremendously since 1996. Concentration has increased, gatekeepers have increased and barriers to entry are real and significant. The policy responses have to be pathways towards lower prices through either administrative monopsy rate setting, reducing barriers to entry (eliminating CON laws, allowing more master level clinicians to practice to the edge of their license), reducing monopoly length and profits, increasing approval speeds or directing more money to narrow networks of lower cost providers.
There are thousands of ways to achieve these goals but this is where health policy on cost control has to go in the future.