So what happened in health care in the United States in 2018, and which of those events might actually represent longer run significant trends. We constantly are preoccupied with the cost and quality of health care and with people’s access to it, so those are natural issues to start with. National health spending appears to be continuing a modest growth trend, perhaps even under the rate of economic growth. If it continues, this would obviously be a very welcome development, but I think we need several years of this growth rate to conclude that we have made real progress. The slowdown has been caused by less inpatient use and moderation of drug pricing, but we can’t count on the latter for long. While some health systems in urban areas are making very high prices, largely due to consolidation, a number of rural and smaller ones closed their doors this year. Controlling the market power of large health systems will be an ongoing challenge. So spending growth is in a good place for now.
Quality seems to have improved, but it is not clear to me that the systems we use to measure that accurately detect real health changes or improvements for patients. The process measures that are most widely used seem to show progress but how well they reflect health outcomes is unclear. Certainly from a public health perspective there are major issues, with high rates of drug and alcohol use, and great prevalence of obesity, with all its attendant diseases. We have definitely not figured out how to get people to consistently engage in healthy behaviors. And while some people are concerned about access, as the number of uninsured crept up slightly, the reality is that a lot of people don’t need insurance and when they aren’t forced to buy it, they won’t. And others are just irresponsible and even if they get it free, aren’t going to sign up. So on the quality and access fronts, I suspect we are gradually doing better.
Consolidation, vertical and horizontal, continues to be one of my biggest concerns. As the Aetna/CVS and Cigna/Express Scripts got approved toward year-end, some people were talking about the supposed benefits of this kind of integration, but that is just nonsense, especially in the case of Aetna/CVS. The most likely outcome is higher prices and distracted companies, which will lead to worse quality. And the pace of provider vertical and horizontal integration continues to be far too rapid, leading to even more powerful health systems that dictate price and have little reason to improve quality. But I haven’t seen much willingness from regulators to stop it.
Perhaps the most significant event was the emergence into the market of the first new gene and cell therapies. (full disclosure, I am involved in a startup to manage these therapies) These I do believe will be radically transformative of health care, largely from a cost perspective, although some may have dramatically better health outcomes. I literally don’t know how the system will pay for these therapies, and I think the pervasiveness of their applications is under-estimated. These will be front-line therapies for many diseases in just a few years. And they have average total price tags in the hundreds of thousands of dollars. This will be a much bigger challenge for the system than even specialty drugs. But they also represent the long-awaited fruition of all the research that has gone into human biochemistry for decades.
That is it for 2018, hope you all have a good New Year’s holiday and that 2019 brings success in all your endeavors.