Health Care Tomorrow: A Revisionist Preview

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Jeff Goldsmith predicts that, despite inevitable changes, the future of health care is more sound than many people believe. Goldsmith, president, Health Futures, Inc, Charlottesville, Va, and associate professor of public health sciences at the University of Virginia, Charlottesville, presented A Look Over the Horizon at Beyond™, the Third Annual GE Healthcare Outpatient Imaging Center Conference, in Washington, DC, on July 25, 2008. The changes to come, he says, do not all merit the sense of impending doom with which some analysts surround them.
Jeff Goldsmith
The rate of increase for the cost of health-insurance premiums has slowed precipitously since approaching 14% in 2003, reaching a point in 2007 that put it (at 6%) only about 2% above wage increases and 4% above general inflation. This slowed growth in health care costs, Goldsmith says, is attributable primarily to three factors. First, hospital admissions and surgeries have decreased. Many physicians are seeing fewer patients than they did in recent years, and many of the physicians from the baby-boom generation have left medicine and have not been replaced. Both factors reduce the patient base of which inpatient admissions are a percentage. Because consumers have found their copayments increasingly hard to afford, there has been an apparent decrease in admissions for elective procedures, Goldsmith adds. Considerable declines in cardiac admissions (including those for acute myocardial infarction) have been taking place since 2000. In addition, admissions from the emergency department have been dropping because payor and capacity pressures have combined to push patients who would once have been admitted to the hospital into 23-hour observation beds in the emergency department instead. Second, spending on prescription drugs has dropped dramatically. Sales growth for pharmaceutical companies, which exceeded 19% in 1999, had decreased to about 6% by 2007. There has been a large increase in the number of employees whose prescription coverage is based on a tiered system that encourages the use of generic drugs, accompanied by a decline in the number of workers covered by plans that do not make such coverage distinctions. Faced with higher out-of-pocket drug costs, consumers have responded by requesting that generic drugs be prescribed for them. This trend is likely to accelerate, since drug patents worth approximately $88 billion (and covering several of what Goldsmith describes as major blockbuster drugs) will expire between 2008 and 2013. Third, inflation, a slowing economy, and higher out-of-pocket expenses have combined to create a cash crunch for health care consumers that acts as a deterrent to elective health care. For those who have employer-sponsored health insurance, the average percentage of the premium paid by the worker who has family coverage increased only 1% (from 27% to 28%) from 1999 to 2007. The actual average premium that this percentage represents, however, has increased from $129 to $273 per month paid by the employee. By 2005, out-of-pocket health care costs had reached $249 billion, and adding payroll deductions for insurance premiums to that amount brought consumer health spending to a total of about $438 billion per year. The cost of health care borne by consumers closely approached total spending for Christmas in 2005 ($440 billion), and was not far from total restaurant sales ($476 billion). It is not surprising, Goldsmith notes, that elective procedures have not been consumer priorities, especially since real earnings have been declining over the same period and have been negative since October 2007. Policy Changes In what Goldsmith describes as a political disconnect, many legislators and other policymakers have failed to understand the public’s health priorities. Voters—93% of whom have health insurance—are not angered by the fact that 47 million US residents are uninsured, but by the price that they are paying for their health care. In 2007, rising health care costs were the public’s most serious economic concern, Goldsmith says. Health reform would cost $150 billion, he estimates, and would require raising taxes and/or taking subsidies away from powerful interest groups that include employers, labor unions, insurance companies, and health care providers. The uninsured who would benefit from this, Goldsmith adds, are not organized and do not vote, in general. They consist of about 10 million people aged 19 to 26, with 33% of this age group being uninsured; another 10 million people who lack US citizenship; 8 million children; and about 11 million people, aged 45 to 64, who lost their health coverage when their marriages or jobs ended. Of US residents of Hispanic origin, more than 15 million (34%) are uninsured. The political power of the uninsured has not been sufficient, so far, to drive reform. Overall, Goldsmith says, the most pressing problems of the US health care system are not those of coverage. Primary care access (which is self-insured, for most people) is inadequate, and the availability of geriatric care is too low, just when the aging of the population makes geriatrics such an important specialty. Goldsmith describes the coordination of care as terrible, and he says that the mental health care system has collapsed. The implementation of necessary health IT is taking much longer than it should, at least outside the armed forces, and service, cost, and value in health care are all in need of serious improvement. Goldsmith predicts that the agenda of Congress, in 2009, will have little room on it for health care reform, although the bipartisan Healthy Americans Act (S 334, now under review by the Senate Finance Committee) bears watching. Congress may increase centralized control over the Medicare program, Goldsmith says, through changes to Parts C and D. Goldsmith disagrees with the popular premise that the baby-boom generation will drain the US economy by incurring excess health care and pension costs. The modal member of the baby-boom generation is only 52 years old now, he notes, and has greater education and wealth than the members of prior generations. Traditional retirement age is unlikely to stop this generation’s members from working; in addition, they now enjoy much better health status than was previously typical at the same age. There will be increased demand for health services from the baby-boom generation, Goldsmith says, but it will be ambulatory care and pharmaceuticals that see most of that increase. Consumers in this group will expect improvements in the ambulatory care experience, as well as higher quality and better safety measures in all of their health care services. Physicians’ Priorities The baby-boom generation consists, of course, not just of health care consumers, but of physicians. Their work priorities are changing, with many interested in retiring or reducing work hours. Physician morale is currently poor, Goldsmith says, and medicine is becoming a two-tiered system of specialists and primary care providers working under different conditions. Shift work is becoming common, and hospitals are hiring primary care physicians in large numbers. Many physicians are replacing some of their fees with revenue from other sources. These income sources include dividends from their investments in health care facilities, along with stipends that hospitals are providing in return for after-hours coverage of the needs of intensive care units, operating rooms, and emergency departments. In addition, physicians are increasingly accepting money from pharmaceutical companies in the form of speaking fees and from equipment manufacturers in the form of consulting fees. Many baby-boom physicians are leaving medicine about 10 years earlier than expected, Goldsmith says. They tend to be suspicious of hospitals and health systems, being more inclined toward entrepreneurial business models. Many have not become comfortable with health IT, despite years of struggling with it. Stress is a serious issue for many of these physicians, as they have been practicing medicine continuously and are now looking for a better balance between work and other aspects of life. Imaging will lose its share of older physicians and may be unable to replace them all, but Goldsmith advises outpatient imaging providers to focus on their strengths. These, he says, are the negligible infection risk involved in imaging provided outside the hospital, lower overhead costs, greater responsiveness to customers, convenience for patients, and the higher quality of amenities and services that outpatient imaging can provide.