Recently, I had the opportunity to speak to health care executives from 22 different countries about the future of the American health care system. They were particularly interested in the impact the Presidential election may have on health care reform and how the U.S. will move forward. Below is a summary of my remarks.
American Health Care stands at a crossroads. The decisions we make as a country during the next 10 years will dramatically shape our health care system for generations to come. But in order to understand the future of health care, we must first understand how the current system came to be.
Historically, American politics has always played a role in the evolution of our health care system. But it is our culture of innovation, which led to medical breakthroughs and new treatments in the first half of the 20th century that paved the way for the health care system we know today.
Since the early 1920s the U.S has made unparalleled investments in medical research and innovation. So much so that people from around the world would travel to the U.S. to access world-class medical technology. That practice continues today.
Americans, particularly those with health insurance, also grew to expect rapid access to medical resources often without regard to clinical value and cost. Unfortunately, as the practice of medicine became more sophisticated and patient utilization increased, the cost of health care also began to rise. Today, health care spending by government and individuals is rising three times faster than the U.S. Gross Domestic Product (GDP).
The U.S. Problem - Access, Quality and Affordability
Most people agree that the problem with the U.S. health care system is the lack of access to quality, affordable health care for everyone. While the number of uninsured Americans dropped in the last year, nearly 49 million are still uninsured and only receive health care sporadically.
The U.S. currently spends $2.8 trillion or 17 percent of GDP. By 2019, we can expect to spend $4.6 trillion or 20 percent of GDP. Each day, 10,000 baby boomers are turning 65 and becoming eligible for Medicare. At least half will be high consumers of health care services due to chronic diseases such as Diabetes and obesity.
In some instances spending more money and applying more technology may make a difference in health outcomes. However when it comes to the end of life these judgments are extremely difficult as unfortunately, no amount of money and technology can change the inevitable outcome. Yet, nearly 30 percent of Medicare’s budget is spent in the last year of life. It is understandable why many families struggle with this difficult subject as no one wants to see their loved ones suffer or pass prematurely. However, as our population ages and spending increases, we cannot ignore the need to address this sensitive issue.
Adding to the cost burden is our failure to invest in information technology that would improve the integration of data to improve clinical decisions and reduce the administrative cost of care. We also know that poor quality is the result of clinical practices that are not evidence based, unwarranted treatment variations, and defensive medicine based on fear of law suits.
While Americans get value from our health care spending, there is clearly room for improvement, particularly as it relates to eliminating waste in the system, which accounts for approximately $1.2 trillion. If left unchecked, health care will soon become unaffordable, which in turn may lead to price controls and the stifling of medical innovation, a hallmark of American health care.
Financing Health Care Emerges as a Key Issue
It is not surprising that how we finance health care has been the center of debate for decades. Each of us has a huge stake in the outcome. The U.S. health care financing system is an accident of tax policy and the strong U.S. cultural preferences for individual choice, and the belief that more expensive care and more technology will lead to better results and outcomes.
In 2010, the Congress once again took up the cause and crafted the Affordable Care Act, which started with three goals:
- Increase access
- Lower costs and increase affordability
- Improve quality
The legislation challenged our cultural beliefs and sparked a national, often contentious, debate over the roles of the federal government, state governments, and the private sector composed of physicians, hospitals, pharmaceutical companies, medical device manufactures and health plans. Historically, there has been a strong preference for local solutions, and state level health care regulations.
Unfortunately, the legislative debate soon lost sight of any meaningful focus on the affordability, cost and quality issues. Rather, the debate shifted its focus to developing a path to access for the uninsured, coupled with the desire that everyone participate in the insurance pool through the use of an individual mandate.
The U.S. Supreme Court settled the constitutional question of the ACA’s individual mandate by interpreting it as a tax and not an exercise of the commerce clause. However, the Supreme Court also limited the mandated Medicaid expansion. As a result, it is not clear to what degree the states will choose to expand Medicaid.
Two years ago, at the height of the controversy as the law was being passed, 40 percent of Americans said they did not favor the law either because it went too far or in their opinion, it did not go far enough. Two years into implementation, 40 percent still do not favor the law.
Health Care Transformation is Legitimized
I believe a key benefit of the national reform effort was that it legitimized the need to transform the financing and delivery of U.S. health care. Efforts to change the system, triggered by the recession and the unwillingness of larger employers to pay more for their employees’ health care, are well underway across the sector including:
- New benefit designs and initiatives to increase employee health and wellness
- Experimentation with new ways to deliver integrated health care focused on outcomes
- Redefined patients’ role to include greater personal accountability for managing their health
- Migration to new provider business models of financing and population management
Although the private sector has stepped up to the challenge, the question of how to slow the rate of increase in federally financed health care and its impact on the U.S. deficit and the debt remains unresolved. Medicare and Medicaid, perhaps the most difficult aspects of our health care puzzle, are fundamentally unsustainable as structured. Efforts to solve this issue within Medicare include programs designed to incent greater use of electronic medical records by providers in order to increase administrative efficiency and care coordination as well as improve quality.
The Path Forward
Regardless of who wins the Presidential election, I believe the quest for access to affordable, quality health care will continue to be a top priority. The reality is that our country has no choice but to pursue significant change within our health care system. We simply cannot afford the status quo.
To that end, I believe the country will continue to coalesce around the need for change. We will see disruption within the industry as more stakeholders consolidate, diversify and partner in new ways. I also expect aspects of the Affordable Care Act to change. A renewed emphasis on ways to improve quality and increase affordability will emerge as calls to curb government and individual spending intensify.
We will see greater cooperation and partnership between the public and private sectors as lessons learned from the first two years of ACA implementation take hold. Given the lack of readiness by many states, the Insurance Exchange model set to take effect in 2014 will evolve supported by market-based solutions. Medicaid will continue to be controversial and in need of help as many states resist expansion.
We will however continue to face serious challenges compounded by a number of factors:
- Demand for health services will exceed the supply of physicians as millions of formerly uninsured patients enter the system starting in 2014. It’s estimated that the U.S. will face a shortage of 100,000 doctors by 2020;
- The prevalence of chronic diseases is emerging as a leading public health problem. It is estimated that two-thirds of adults are either overweight or obese. The U.S. spends approximately $200 billion per year treating obesity-related diseases;
- The lack of a consistent, system wide health information technology infrastructure to drive greater transparency regarding cost, quality and value; and
- Slow progress in aligning the payment system, moving from a fee for service system to a system based on outcomes or value.
These issues are complicated and interrelated. So too are the solutions. If we are to solve them we must build a new health care financing and delivery of care system that:
- Emphasizes prevention and wellness at all stages of life;
- Aligns resources to manage populations, particularly those with chronic diseases;
- Is supported by technology that turns data into transparent knowledge for use by physicians and patients; and
- Financially rewards outcomes not activities through gain sharing approaches.
Many organizations have begun to create this system. Early pioneers in modeling integrated, patient-centered health systems include the Cleveland Clinic, Mayo Clinic, Kaiser and Geisinger. Health plans such as Aetna, United and CIGNA are also leading the way by working with providers to develop innovative models of health care financing such as Accountable Care Organizations for both Medicare and commercial populations.
If we continue to follow this path forward I believe we can realize our goal of a health care system that is accessible, affordable and delivers high quality care for all Americans for generations to come.