Here is an example of the kind of consolidation that has to be stopped if we are to rein in excessive costs in the US health system. Kaiser is planning to buy a large hospital system in North Carolina, further combining the health plan/provider model, but also further limiting competition.
It is useful to understand past components of health spending from multiple perspectives, but it is even more important to examine where that spending is heading in the future. Health spending is a huge percent of the US economy--over 18% of GDP. Every year the Office of the Actuary at the Centers for Medicare and Medicaid Services, which oversees the Medicare program and federal aspects of Medicaid, releases its analysis of spending in the past year and projects future spending. (OA Report) Health spending grew 7.5% in 2023 compared to 2022. National health expenditures were $4.46 trillion in 2022, $4.8 trillion in 2023 and is projected to be $5.04 trillion in 2024 and $7.7 trillion in 2032. Personal health care expenditures, which is the health care we all receive, was $3.7 trillion in 2022, $4.04 trillion in 2023, and is projected to be $4.25 trillion in 2024 and $6.53 trillion in 2032. On a per capita basis was $11,200 in 2022, $12,140 in 2023 and is projected to be $12,700 in 2024 and $18,600 in 2032. Bet you didn't know that much was being spent on your health care!! Of personal health care spending in 2023, private health insurance spent $1.43 trillion, Medicare $1.02 trillion, and Medicaid $852 billion. For 2032, projections are that private health insurance will spend $2.22 trillion, Medicare $1.94 trillion and Medicaid $1.33 trillion. On a per employee basis, for 2023 private health insurance spent $6838 per person, Medicare $15,689 and Medicaid $9336. For 2032 the comparable figures are projected to be $10,576 for private insurance, $24,921 for Medicare and $15,632 for Medicaid. Private insurance spends less because the covered population is younger and it is managed better. Looking at those projections for Medicare and Medicaid spending, you can see why the federal budget is so stressed. 93% of the population had some health coverage in 2023, that is projected to drop to 90.7% by 2032, largely because the epidemic Medicaid expansion is being reversed. In 2023, about 210 million Americans had coverage through private health plans; 65 million through Medicare and 91 million through Medicaid. In 2032, as the population ages, the same number are projected to be covered by private insurance, 77 million by Medicare and 85 million by Medicaid. The Medicaid numbers are ludicrous, Medicaid was supposed to cover a few people unable to work, not old enough for Medicare and without another source of health insurance. As people never tire of pointing out, our health spending is far higher per capita than that in other advanced economies. But that comparison ignores health lifestyle issues, like obesity and drug and alcohol abuse, that are far more prevalent in the US. And most of that difference is due to higher prices in the US, not excessive utilization.
Feb062024
Cano Health apparently cannot, as it declares bankruptcy due to too much debt. Building primary care centers to serve Medicare, Medicaid and commercial populations, which is Cano's business, was hot over the last decade. Better primary care is important. But as usual, too much capital can cause a business to make bad choices and several of these primary care center businesses are struggling.
Turquoise health raises a fresh $30 million in capital for its price transparency platform, as the market for funding health care companies isn't quite dead yet.
I am co-f0under of a company that manages cell and gene therapy for health plans. Cell therapy has made a big difference for many cancer patients but like all new therapies it has risks that often aren't apparent until there has been significant use. The FDA has now required a new safety warning because of the possibility that the therapies are associated with T cell cancers.
Mental health company Headway makes, well, headway, by raising an impressive $125 million round of new capital. The company connects patients with mental health providers and facilitates providers working with payers. Still a lot of money floating around out there and sketchy deals still getting done.
Two health care firms owned by private equity firms are merging in a transaction supposedly valued at $3 billion. HealthComp administers self-funded plans for employers and other groups and Virgin Pulse provides wellness and care management services.
NextGen, an electronic medical records firm, is being put out of its public company misery, as a PE firm will pay $1.6 billion for the one-time high-flier.
A number of companies which attracted large financing rounds during the epidemic have imploded when reality set in. The latest is Cano Health, which is a little surprising since it was a primary care center company, and others with similar models have been very successful. In any event, the public investors appear in for a big loss.
Another over-hyped digital health company screws shareholders who bought the hype, as Babylon Health has to bail itself out by going private, with nothing being returned to ordinary shareholders. The epidemic froth created a whole boatload of these situations, and the bill is coming due now.
For those who would like to read more on the crisis of fake and bad science, read this excellent report from the National Association of Scholars. just click this post.
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at khroche@healthy-skeptic.com.