I thought you might find this graph interesting. Yes, costs were much more stable in 2023. That’s not the case now. The factors mentioend in the linked article include higher labor costs and consolidation among hospitals.
This piece from Health Services Research was cited in comments not long ago. I wonder if this passage was understood?
Overall, CMS projects that, under current law, after adjusting for inflation, spending for Part A and Part B services will rise by an average of 4.5% annually between 2023 and 2032, driven entirely by growth in the number of beneficiaries and growth in the volume and intensity of services used.
The emphasis is mine. Do providers potentialize the care provided to Medicare recipients? If my experience is any gauge the answer is undoubtedly “yes”. A factor that needs to be kept in mind is that in the United States at least much of the demand for healthcare is driven by providers. You may call it what you like but I would call it potentialization.
Hold on a second there, buddy. You’re not telling me steves claims are really an artifact od 2023 are you?
Lets take two steps back. From 2000 to 2020 health care costs were up 90%. All costs 45%. Let me get my HP. Ah, yes, that’s 2x.
Then we had the Great Inflation due to the Inflation Reduction Act (snicker). Those numbers are now up 115% and 85%, respectively. Basically 1.4x. Call me crazy, but health care is not a model of cost control. And inflation is now 2.7%. Projected 4.5% sounds an awful lot like just under 2x.
Potentialization? Hmm. I seem to recall a certain commenter telling us long ago that he didn’t care if ObamaCare limited fees charged to providers. After all, the providers would just find something else to bill for to make up the shortfall. The nobility of the practice of medicine……….
I’ve mentioned this before but perhaps I should mention my prescriptions again. Back in 1965 I thought that Medicare was a bad idea because it went so far beyond the actual needs and, importantly, there were actual needs. I thought a better choice would have been a chain of clinics modeled on the VA operated by the federal or state governments for the poor, particularly the elder poor which provided a limited menu of services.
At this point I think the costs are so deeply ingrained into our system that a single-payer system alone not only would not solve our problems but could actually aggravate them. I have no particular fondness for healthcare insurers. I think they should be actual insurers, presumably for catastrophic care, to prevent ordinary people from being penurized by medical bills. I think the “maintenance plans” described by Drew should be abolished. They’re adding to the problems.
Beyond that I don’t believe in a free market system, either. I believe that physicians should continue to prescribe courses of treatment and there is no such thing as a free market in healthcare as long as that’s the case and occupational licensing is in force. I think the “fee for services” system must go. Its incentives are wrong.
I suspect a capitation system would work better here. Maybe “fee for services” works better for Germans than it does here.
I recognize there’s no way to get to anywhere good from where we are now. We’ll just keep doing what we’re doing until there’s a debt crisis.
You are confusing costs with total spending. The quote notes that spending will go up because there will be more people using Medicare and they will using more intensive services. 200 people having a colonoscopy will cost more than 100 people having a colonoscopy. Dave has been emphasizing that prices have been going up, which as I keep noting has been true, but I have also noted that since the ACA passed the prices increases have been slowing.
Drew- Policy looking to decrease total spending will need to be different if it is due to a lot more people on Medicare OR costs increasing because prices for the same procedures/care we provide now are increasing. Dave could have made this clear by adding the sentence that immediately follows his quote…
“Medicare’s prices, under current law, are projected to decline by 0.7% annually over this period after adjusting for inflation.”
Steve
There is a chain of federally subsidized clinics, Federally Qualified Health Center is a good place to start a search. My own dealings with is that they are prone to bury patients in paper seeking to enroll them in medicaid, VA, etc but BTN.
Should we not expect that with an aging population Medicare costs will rise faster than CPI? Shouldn’t that happen regardless of how we pay for medical care? Anyway, I don’t see how anything will change until interest payments on the accumulated debt cannot be paid or lenders will not buy any US debt.
On the other hand, we are actually getting a single provider system. Here in rural north central Ohio, the local Hospital has bought up all the private medical practices, and all our local physicians are employees of the Hospital. (Our family doctor actually prefers the new arrangement.) The same thing is happening in southern NH, where my sister lives.
So what does that do to “costs.” Is our local Hospital big enough to wrestle with insurance companies like United Health? They are certainly big enough to dictate costs to us.
PS. No matter where I go in my County, the physician I talk to has complete access to my medical history via the Hospital’s online data base. I find that comforting. If I am found lying unconscious on a gurney, there will be no mysteries. The only medical practices not incorporated into the Hospital are dental services and optometry services. Ophthalmologists are fully owned by the Hospital.
In my experience efficiencies of scale are greatly exaggerated, most being realized below the enterprise level. That was borne home to me when one of my vendors accidentally sent me an invoice belonging to one of their largest customers. My tiny company received the same discount they did.
Having helped take over about 10 failing smaller hospitals and several outpatient facilities and talking with others who have done the same and read some of the literature on these takeovers it doesnt often lead to cost savings for pts. Often, the hospitals are failing as they weren’t large enough to join a purchasing group to save money. The larger hospital taking them over does belong so the smaller hospital goes from failing to in the black by being able to save money. (Usually this is only part of the problem. There is almost always bad management.) This doesnt get passed on to patients.
Other advantages to the smaller hospital being taken over access to capital to repair facilities (almost always needed), better managers, access to better specialists and hospitalists and reliable place to send referrals.
At the provider level the hospital wants to control market share so they really want to control the PCPs. The PCPs tend to like it as they make money be selling their practices then they generally make close to what they were earning before selling but they belong to a larger group so call is less frequent. (If you dont understand taking call you wont understand hiring docs.) The older docs generally resent the loss of independence and having to answer to administrators but the younger docs dont seem to care so much.
It is nice to be able to access everyone’s records. EPIC was supposed to do that and maybe it does it now, I am retired. However, when I was still working I could most fo the time get access to records from the other major network in our area but it wasn’t formatted well and info I could find in seconds on our version of EPIC could take 10-15 minutes on their version and occasionally I couldn’t find it at all.
Steve
The emphasis and highlighting are mine. That problem isn’t limited to hospitals or medical practices. A lot of management is very bad. I’m struggling with that right now IRL. Acquisitions temporarily paper over bad management. Reorganizations temporarily paper over bad management.
Paper over? We replaced it. Every facility we have taken over has gone from money loser to money maker, most in less than a year. In every case we replaced senior management and often some of the other layers. We could sometimes consolidate management with other places. We mostly keep the same staff though we had to fire many of the doctors.
Thinking this over before posting I think we have been lucky as we have taken over clearly failing places. Our major competitor just merged with a larger network out of Philly. Both were not doing well financially. In that case they merged with the larger entity nominally taking control but both parties retained management.
Steve
I have rarely seen that happen. What I have seen more commonly is leaving top management in place for some period of time and getting rid of middle managers. Since the biggest problems are frequently at the top, that doesn’t change a lot but it does produce a lot of kerfuffle.
Just to add to your data file the paper at the link looked at drug patents from 2005-2015. Only 22% were for drugs that were actually new. The others were some form of patent extension, which is more pronounced with the blockbuster drugs.
https://academic.oup.com/jlb/article/5/3/590/5232981?login=false
Steve
Derivatives should not be patentable at all. That’s a perversion of the patent system.