Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
September 25, 2013 01:00 AM

Reform Update: Pricey technology may drive growth in health spending, not economy or reform, analysis finds

Melanie Evans
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    High-priced technology—not the economy and not healthcare reform—has the most potential to drive U.S. health spending growth upward in the years ahead, a new analysis published by the Brookings Institution (PDF) has found.

    Economists at Harvard University and Dartmouth College said pricey brand-name drugs and capital-intensive technology are “the primary determinant of long-term growth.” They also said that despite sluggish spending on prescriptions in recent years, “there is little evidence of slowdowns in the technology pipeline.”

    Policymakers and economists continue to puzzle out the record slowdown in health spending, now in its fifth year, and to worry about whether spending growth will take off again. Any speedup in costs would have serious consequences for household budgets, employers and federal and state government budgets. The Great Recession and the soft economic recovery have been named frequently as key factors behind the slowdown in U.S. healthcare spending; costs have grown just 3.9% a year since 2009. Other research has credited public and private efforts to make healthcare delivery more cost-efficient.

    But study authors Amitabh Chandra, Jonathan Holmes and Jonathan Skinner are not convinced. They said, “we find little evidence that the Great Recession alone was the cause (income effects in healthcare are small) or that the 2010 Affordable Care Act could take credit (it still hasn't phased in yet).” Their analysis said the growth of health plans that expose consumers to greater out-of-pocket costs contributed to the slowdown.

    Data released earlier this week found privately insured patients are paying a greater share of healthcare costs.

    Healthcare spending growth per capita likely will rebound to exceed the growth in gross domestic product by 1.2 percentage points, the study authors said.

    National health spending projections released last week—which cited the economy as a major factor in the slowdown—estimated that by 2022, per capital U.S. health spending would increase 5.6% as the economy grew 3.9%. An economic recovery and a large number of aging baby boomers will drive health spending growth, CMS officials said.

    Chandra, Holmes and Skinner said reform efforts may produce “fundamental changes” that could slow spending, such as moves by insurers not to pay for treatments that lack empirical support.

    Still, the authors said medical technology and new drug development will continue to be spending drivers. For instance, twice as many proton beam accelerators will be operating next year as in 2010, the said.

    Austin Frakt, an economist at Boston University and blogger at the Incidental Economist, said research has identified technology, insurance coverage, benefit design and national income as major drivers of health spending.

    One final note: The authors of the Brookings analysis said costs for privately insured Americans may slow to 2% annually from 3.6% between 2008 and 2012 as antitrust regulators do more to check hospital consolidation and as hospitals face more market pressure from “superior quality measurement, transparency, narrow networks and tier networks.”

    Drug costs and health spending

    Rising prices for generic drugs, which were also used more widely last year as blockbuster drug patents expired, contributed to a 3.8% increase in prescription drug spending among privately insured Americans last year, the Health Care Cost Institute said. That's a notable departure from the projected growth in drug spending included in federal estimates released last week, which show a 0.8% drop in drug costs.

    Follow Melanie Evans on Twitter: @MHmevans

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Shannon Striebich-01_i.jpg
    Trinity Health president speaks on financial problems with new operational solutions
    Mayo Clinic
    Mayo Clinic announces redevelopment at main Rochester campus
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing