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Another Periodic Reflection on the State of the Health System

By March 4, 2015Commentary

There has been such intense inspection of the American health system for so long, and so many public and private efforts to improve that system, that it can be hard to get the big picture.  And my understanding of what is happening at a macro level and my ability to predict what will happen in the next few years is no better than anyone else’s.  We have been fortunate to have several years of relatively low health spending growth–still above economic growth, but less of a gap.  Whether that will persist is debatable.  Those of us who have lived through a few of these cycles are skeptical that something is fundamentally different.  There may be recent signs that spending is starting to accelerate again, but it is too soon to come to that conclusion.  One trend to watch closely is how long providers, who have both market and political power, will tolerate low income growth.

The cause of slower spending growth is likely multifactorial, but one big piece has to be the increase in premium contributions and cost-sharing for consumers.  Reform and the exchanges have only contributed to that trend, with most plans sold having high cost-sharing.  Recipients of health care are splitting into several broad groups.  One, relatively small, consists of higher-income consumers, who really aren’t that concerned about cost and who usually have coverage.  Another is Medicare recipients, who have good coverage, but can have significant premium and cost-sharing.  The third is poorer individuals who qualify for Medicaid, including Medicare recipients who are dual eligibles, and who generally have gold-plated coverage–they basically have little or no cost-sharing and a very broad benefit package.  Another group consists of government employees and retirees who usually still have coverage with very little cost-sharing and low premium contributions and very rich benefits.  Finally, the largest group is that with employment-based insurance or other forms of private coverage, including through the exchanges, and who are not wealthy.  This is the group we should be most concerned about, as health costs are growing far faster for them than their income is.  This is the group most likely to skimp on care due to cost concerns.  And this is the group providing the taxes to fund the much better health care coverage for other groups.  The unfairness is obvious to all but ideologues.  This unreasonable distribution of health spending funding and benefits will cause higher and higher tensions which must be addressed.

We can also believe that it is likely that health care quality may be improving–people are generally getting more effective treatments and the delivery is more consistent and mistake-free.  But it is unclear that Americans health status or health outcomes are better.  We still have extremely high, and growing, levels of lifestyle diseases.  So maybe things are getting better, but the underlying structural issues haven’t really been addressed, and we shouldn’t be surprised if high levels of public unhappiness with the system persist.

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