If the growth rate in U.S. healthcare spending continues at current levels, a much greater share of personal income and economic resources will be devoted to healthcare, according to Health Affairs.
A report in the journal indicates that even if the growth rate could be slowed sharply – to a pace of 1 percent faster than annual per capita growth in the gross domestic product – more than half of any increase in personal income would still go to healthcare over the next 75 years.
In an update of work published in 2003, Harvard researchers Michael Chernew and David Cutler, along with the University of Michigan's Richard Hirth, find that if health spending grows about 2 percent faster than real per capita GDP, 119 percent of the real increase in per capita income would be devoted to health spending.
This means, in effect, that the entire net increase in income over the period would go to consumption of healthcare resources, as well as a portion of what currently goes to other goods and services.
If the nation could slow the growth of health spending to 1 percent faster than real per capita GDP, 53.6 percent of real income growth would go to healthcare. That's "affordable," the authors argued.
"These projections make the impact of healthcare spending more dire," they said. If the United States hopes to maintain a reasonable consumption of non-medical goods and services, they added. slowing the rate of health spending will be crucial.
Chernew says the analysis makes clear that policymakers face tough choices if they fail to bring health spending under control.
To pay for healthcare under programs such as Medicaid, state governments with balanced budget requirements would have to cut back even further on essentials such as education or social services. Individual Americans would be devoting far more of their paychecks to healthcare and would be forced to cut other items in the family budget.
To lower health spending growth without lowering net "welfare," the authors maintain that the healthcare system must:
- Organize the delivery of care to promote efficient cooperation among providers and practitioners involved in delivering modern medical treatment. The current fee-for-service payment system works against efficiency, and provider payment reform has a critical role to play in promoting efficient and coordinated care delivery.
- Conduct costly research over many years to identify which procedures are effective at reasonable cost, develop protocols that enable providers to identify in advance patients whose expected benefits of treatment are low or negative, design incentives that encourage providers to act on these protocols and educate patients about why such protocols should be sustained.
- Continue research to maintain medical innovations to help ensure that spending reductions remain beneficial over time.