Get your shovels ready! In our third edition of Going Below the Surface, we invite you to dig deeper with us as we explore topics such as why we are seeing an increase in health care spending in the United States and why value-based care is taking so long to root.
To start, watch health care policy experts from across the spectrum discuss how we can get to the root of our health care sending challenges and find solutions. We encourage you to share, subscribe and follow us between issues using #GoingBelowTheSurface. Questions or comments to help us improve the newsletter? Drop us a line.
Unearthing novel solutions to how finite health dollars are spent requires vigilance to ensure that we are considering the right numbers and perspectives, rather than reproducing old arguments. This month, we take a look at the latest estimates for national health spending, as well as a major stakeholder in the health care system that often seems to be left out of the dialogue: patients.
Good News, Bad News on Health Spending
Altarum’s monthly analysis of health spending found that, from June 2017 to June 2018, national health spending clocked in at 17.9 percent of gross domestic product (GDP), essentially the same rate as the year before. From the surface, that could be seen as a sign that outlays on health are stabilizing. But looking beyond the headline punctures the illusion: Economic growth across the economy has surged over the past year, masking continued growth in what Americans spend on health care. Altarum’s figures show that the United States saw health spending rise by 5.2 percent year-over-year, well outpacing inflation.
Why It Matters:
One of the biggest dangers in the health spending conversation is complacency. The Altarum data – which gives a sneak peek at what the official National Health Expenditure numbers will look like – suggests that the flatlining of health spending (as a percentage of GDP) is an illusion that hides a spending increase more than twice that of inflation.
Unlocking Value by Promoting Patient Engagement
Much of the emphasis on value-based payment models has been on delivering benefits to the providers and the health care organizations. But a “Viewpoint” in JAMA Oncology from leaders at the Duke-Margolis Center for Health Policy suggests placing a spotlight on the role that patients can play in value-based cancer care. “Patients who actively engage in their care should be able to earn financial benefits for doing so,” the paper concludes, suggesting that innovation-promoting reforms should work to increase opportunities for beneficiaries to reduce out-of-pocket payments. That is not a process that will happen naturally; the New York Times in late July published a piece titled “Shopping for Health Care Simply Doesn’t Work.”
Why It Matters:
Patient benefit from cost-effective treatment decisions – including those under their own control – has traditionally been overlooked as an incentive. Helping patients understand that link, however, is a largely unfilled educational opportunity.
What We’re Reading in the Journals
Countless studies and news articles have been written about how our health care system is shifting from one that is based on volume — or the number of services performed — to one that is based on the value of the care provided. But how close are we to realizing a value-based system in the United States as a way to manage rising health care costs and improve patient care? This month, we take a closer look at this question and the barriers slowing our progress on value-based care via peer-reviewed journal and news articles.
- Doctors, Payers Think Transition to Value-Based Care Has Slowed, Survey Says. Inserro A, July 17, 2018, American Journal of Managed Care. According to the third annual survey of health plan executive and providers commissioned by Quest Diagnostics, “physicians need better tools, like data access, and less complex quality measures to spur adoption of value-based health care, which focuses on care quality and patient outcomes rather than the quantity of services delivered.”
- Medicaid’s Path to Value-Based Reform. Liao JM, et al. July 12, 2018, New England Journal of Medicine. There are a number of reasons why moving to a value-based system is more challenging for Medicaid than for Medicare. These include less opportunity to change existing patterns of care under a managed care system, the challenges of managing care with populations with extensive socio-behavioral needs, and frequent churn — or turnover among those using Medicaid — making it hard to implement disease management and prevention programs or measure quality over time.
- Value-Based Health Insurance Design: How Much Does Socioeconomic Status Matter? Sherman BW, Addy C. July 18, 2018, American Journal of Managed Care. This study considers whether benefit programs aimed at driving employees to use high-value health care services work effectively for low-wage employees. The answer: Not yet, but there are steps that employers can take to encourage better use of value-based insurance design tactics.
Dialogues on Health Care Spending
Conversations about health care spending are popping up in peer-reviewed journals, at conferences and on social media (and a special #thankyou to those who have been tweeting about this topic with #GoingBelowTheSurface!). We wanted to share some ongoing discussions via a new video, the Health Affairs Blog and an upcoming event.
Video: Going Below the Surface on Health Care Spending:
In this brief video, health care policy experts from the National Pharmaceutical Council, Kaiser Family Foundation, Harvard University, Duke Margolis Center for Health Policy, RTI International, the University of Chicago and the Dartmouth Institute discuss how can we get to the root of our health care spending challenges and find solutions.
The Pharmaceutical Supply Chain, By the Numbers:
Over the past two years, it’s become clear that the money spent on pharmaceuticals in the United States ends up in a lot of different pockets of groups across the supply chain.
Three weeks ago, in the Health Affairs Blog, Memorial Sloan Kettering Cancer Center (MSKCC) researchers tried to quantify exactly where the $480 billion spent on medications ends up, concluding that pharmaceutical companies see 67 cents of every dollar spent on drugs. Pharmacies get 15 percent, 8 percent goes to providers and pharmacy benefit managers grab 5 percent. Wholesales and insurer account for the remaining share.
Considering Health Spending:
Health Affairs continued to publish articles on its blog and in its journal as part of its “Considering Health Spending Series,” sponsored by the National Pharmaceutical Council and Anthem. In addition to MSKCC’s look at revenue across the drug supply chain, key articles also examine trends in Medicare fee-for-service spending and how to improve end-of-life care, among others.
FT Pharma Pricing and Value Summit: Debate the Future of Pharma Pricing:
At the inaugural FT Pharma Pricing and Value Summit, attendees will hear firsthand how leaders from across the pricing and market access landscape are addressing key challenges through competition, collaboration and regulation. Join them in New York on Sept. 13 to explore the future of pharmaceutical pricing and market access in an evolving health care environment. Going Below The Surface readers can save 20 percent when registering with the discount code NPC20.
About Going Below the Surface
The Going Below the Surface initiative was launched by the National Pharmaceutical Council in 2018 to broaden and improve the conversation around how health care resources are used in the United States. The initiative is aimed at better understanding the roots of the nation’s health spending and investments by promoting a discussion that is firmly based in health policy and systems research. Our goal is to provide clarity on how best to optimize health care spending so that patients receive the right care while simultaneously providing the right incentives to sustain next-generation innovation to improve patient well-being and health system efficiencies.
To view the Going Below the Surface partners, visit www.goingbelowthesurface.org.
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