A Mercifully Brief History of Health Care Spending and Health Reform

Every reform, however necessary, will be carried to excess, that itself will need reforming

Samuel Coleridge (1772-1834)

U.S. health reform is evolution, not revolution, with no resolution in sight.

Personal Belief

·         1945 to 1950 – Public generously supports federal spending for NIH and academic medical research.

·         1950 – Government spending 5% of GDP.

 

·         1950 -1965 – Government spending spikes to 8.9%, leading to passage of Medicare and Medicaid to relieve cost pressures on seniors and the poor.

·         1966-1982 – Government spending soars to 13.0% of GDP,  causing HMO Act of 1973 and other federal actions to contain spending.

·         1983-1992 -   Spending continues at 9.9%.   Clinton administration  introduces comprehensive reform which fails.

·         1993-2016 -  Costs  climbs to 17.5%  of GDP by 2014 despite passage of ObamaCare’s  Patient Protection and Affordable Care Act passage in 2010.

·         2016 -2020 -  Costs still rising with critics predicting that costs may reach 20% of GDP by 2020.    California study indicates government pays for 70% of health costs in that state, versus 45% nationwide. 

·         1950-2020 – Health care industry becomes big business, with emergence of Medical Industrial Complex -  hospitals ,physicians,  drug companies,  high tech suppliers, and health plans working in concert to expand their piece of GDP pie.   

      Doctors enter specialties,  now comprising two-thirds of all  physicians. 

      Health care innovations -  open heart surgery,  organ transplants,  cataract surgeries,   hip and knee replacements,   MRI, CT, and Pet Scans,    and a variety of new drugs, such as statins,  to prevent and treat disease and relieve pain – introduced.   

      Population ages with 55 million on Medicare and 80 million on Medicaid.
   
      ObamaCare health exchanges enter scene in October 2013,  but soon falter, with half of expected enrollment,  more sick patients than expected,  and billions of dollars of losses for big insurers, who withdraw from most markets, and bankruptcy of three of four not-for-profit consumer plans.  

      By 2016,  talk of death spiral of ObamaCare becomes common,  and CMS moves fast to shore up health exchanges and save ObamaCare by changing rules of reimbursement , introducing Simple Care Plans,  compensating insurers more for sick patients,   creating incentives  for doctors to prescribe fewer drugs, and moving from fee-for-service to data-driven “value” payments and Accountable Care Organizations and other forms of risk-based  hospital-primary care- specialty collaborations.    

       Doctor shortages develop, with more doctors not accepting Medicare and Medicaid patients.  Physicians extenders – NPs and PAs- begin to replace doctors as first line of defense against   ill-health and disease.    More than half of doctors become employees, mostly of hospitals.
     
     Private practice declines.  Doctors become employees rather than independent practitioners.  As choices of doctors, hospitals, and health plans decline,  premiums predicted to rise by average of 23% in 2017.    Consumer and voter backlash begins and becomes campaign issue.   Hillary Clinton promises to “fix” ObamaCare, partly by introducing Public Option, the precursor to government-run care.  Donald Trump says he will keep hands off Medicare and Medicaid .  Says he will repeal ObamaCare but assure universal coverage.   He does not exactly how.
     
      The VA does not have enough primary care doctors, veterans die while waiting for care, and scandals develop within agency.   

     In summary,  over the last 70 years  SNAFU (Situation Normal All Funds Up) sets in.  Costs began to escalate after Medicare and Medicaid became law in 1965-1966, going from roughly 7% of GDP spending to 17.5% in 2015 and projected to approach 20% by 2020.  Medicare and Medicaid entitlements biggest drivers of national debt of $19 trillion. 

      In retrospect, this rise was inevitable with an aging population,  advances in technology,  more physicians becoming specialists,  evolution of the medical industrial complex,  comprehensive health plans  that made consumers insensitive to costs,    and a series of medical innovations - MRI and CT scans, ACE inhibitors, coronary stents, statins, mammography,  bypass surgery,  organ transplants, cataract extraction and lens implants, and hip and knee replacements.

      Public demand for these procedures and drugs,  and lack of tort reform contributed.   Also through the Internet, consumers became aware of what services were available.    Government programs - Medicare, Medicaid, CHIP,  renal dialysis - exploded in growth and were subject to  10% to 15% fraud and abuse. 

     ObamaCare, passed in 2010, has these features:  the good (20 million fewer uninsured), the bad (unfilled promises of keeping your physician, hospital, and health plan while lowering premiums),  the ugly (premium spikes, narrowing of networks),  and  possible death spiral of health law.  

     Only history will tell if government can simultaneously expand access while lowering rate of costs elevations  while making care fairer,  improving  quality, and satisfying  consumers.   

    History is not optimistic.