Tuesday, March 15, 2005

Healthcare Spending Growth Out of Proportion to the GDP

AMNews published an informative article summarizing some of the national healthcare spending projections of the next few years. The original data was compiled by the Centers for Medicare & Medicaid Services (CMS) and published in Health Affairs. This journal by the way is very good and most of it can be accessed without a subscription.

The absolute healthcare spending numbers are mind numbing but the salient point is that national spending growth is outstripping growth in the economy as measured by the GDP. According to current projections, during the period from 2004 to 2014, healthcare spending as a percentage of GDP will increase from 15.4% to 18.7%.

Avoiding issues of efficiency or cost-effectiveness (i.e. how much value we're actually getting for our dollar) at some point, we are going to have to ask the question: how much are we willing to pay for good health? At what point do we have to decide that we simply can't redirect any more money from other competing expenses to healthcare?

Certainly in one form or another, rationing is occurring now in the U.S. Most of this is in some way "shielded" from the general public. At some point however, it is going to become much more obvious and we won't be able to ignore the fabled elephant in the corner. How are we going to handle this as a society?

It is also significant that while healthcare expenses as a percentage of GDP rise, the payment of these costs is shifting from the private sector to government. This article sites the following government absorbed expenses:
  • 25% in 1965
  • 46% in the last few years
  • 49% by 2014

This suggests that, as is well-known, we all want more healthcare...as long as someone else will pay for it.

How long can this thinking persist?


Blogger Henry Stern, LUTCF, CBC said...

The assumption here is that this is a fixed or finite pie.

I don't buy that.

What's not addressed in the article is the WHY of the increase. Yes, the (moronic) Medicare rx program is a culprit.

But so is the cost of the incredible strides we've made in patient diagnosis and care. I read recently that, just here in Ohio, we have more MRI machines than the whole of Canada. We can argue all day long about whether or not this is "a good thing," but it is what it is.

And, as our population ages (think "Baby Boomers"), we'll be spending even more. Do you think that the gimme generation will agree to stint on their own care?

The reality, IMHO, is that this is a short term trend. As productivity catches up to technology (in the healthcare field), we should start to see some of these costs decrease.

Or not. But who's going to be the first to say "enough!"?

March 15, 2005 9:40 PM  

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