Toxic Politics Hinder Debate on Healthcare Cost Drivers

Healthcare has become "a surrogate for all the other problems of the country," and "patients have been disenfranchised in the process," says the leader of a Johns Hopkins study on factors that drive healthcare cost growth.

We've been told that key drivers for healthcare cost growth are an aging demographic and the large numbers of tests and treatments in a fee-for-service world.

That's not necessarily so, say researchers from Johns Hopkins University. In a study released this week in the Journal of the American Medical Association, they place considerable blame for healthcare cost growth on the increasing prices of drugs, medical devices, and hospital costs, which doctors, patients and insurers usually don't even know about until the money has been spent.

The study found that since 2000:

• Hospital charges have gone up 4.2% annually; professional services have gone up 3.6%; drugs and devices have gone up 4%; and administrative costs have gone up 5.6%, and are all responsible for 91% of cost growth.
• Personal out-of-pocket spending on insurance premiums and co-payments has declined from 23% to 11%; while chronic illnesses account for 84% of costs overall among the entire population, not only the elderly.
• Three factors have produced the most change: Consolidation, with fewer general hospitals and more single-specialty hospitals and physician groups, producing financial concentration in health systems, insurers, pharmacies, and benefit managers; Information technology, with considerable investment but elusive results; And the patient consumer movement, which goes outside traditional channels, using social media, informal networks, new public sources of information, and self-management software.

Unfortunately those key drivers often are not a central part of a substantive national dialog on what is pushing healthcare cost growth, says study leader Hamilton Moses III, MD, because the debate over healthcare has become politicized, polemic, and poisonous.

"Healthcare has become a surrogate for a host of other factors, primarily the role of the federal government and the respective roles and responsibilities of states," says Moses, a consultant with Alerion Advisors, LLC, and an adjunct professor of neurology at Johns Hopkins University School of Medicine. "This surrogate issue comes at a time when the country has confronted a series of economic crises and wars and forces that are very difficult for us as a country to control and very difficult for us to grapple with."

Ironically, Moses says that his team's research has found that all the news isn't necessarily bad. For example, while the pace of healthcare cost growth remains unsustainable, it has "moderated substantially since early 2000." Even at 3% annual cost growth, healthcare outstrips any other industry, and overall growth as measured by the Gross Domestic Product.

"The untold story here is that beginning in the 1970s but particularly in the 1990s, when cost control measures became routine, the rate of yearly increase has substantially moderated, so much so that if the economy had grown as it had historically before the 2007–08 recession, healthcare as a percentage of GDP would have leveled off or even declined," Moses says.

"Secondly, we point out that the cost of care is really for chronic illness among those under age 65, whereas most of the political attention has been paid to those over 65 in Medicare, which is not surprising since the government share of the payment is about 43% of the total," he says.

Also, most wage earners who glance at their pay stubs each week would be surprised to learn that the individual's share of his health insurance coverage—both in government and commercial plans—has actually declined from 23% of the cost in 1980 to 11% in 2011.

"The consumer has lost a great deal of the say in the debate over healthcare by virtue of the fact that the individual is not directly purchasing care," Moses says. "Public opinion polls have shown consistently since the 1990s that though patients trust their physicians they are progressively less likely to trust insurance companies or hospital systems. That trend has only accelerated since 2010 and the Affordable Care Act."

Why?

"At some level, patients realize that the system is very badly broken in the sense that they have an indirect say, costs are not clear, [and] prices are not transparent," Moses says. "That is all the more important because prices have driven the increases we have seen over the past decade. The patient therefore has in large measure been marginalized in this process. In our view that is what is behind the politicization of healthcare. First, healthcare is a surrogate for all the other problems of the country, but secondly patients have been disenfranchised in the process."

Moses notes that the politicization of healthcare began in the mid-1960s with the advent of Medicare, decades before the Affordable Care Act. "It took 20 years, fully until the mid 1980s, for the full effect of Medicare to become clear," he says. "We expect the same now with the ACA. And in the meantime there is a great deal of political rancor and discussion long before the effects of this legislation are known and long before the effects of previous changes have been completely assimilated."

"We felt the reason for this study was that there needed to be in one place the facts and figures relative to the healthcare debate. Our motivation was that healthcare is a topic that has been deeply politicized over the past two or three decades by really all of the forces and all of the factors that are involved in healthcare. We felt strong as did JAMA that there needed to be a reasoned dispassionate conversation in the country based on real data, real information. That is the gap that we tried to fill."

With that in mind, Moses says he and his fellow researchers made sure that their study would take no positions on any political point. "In fact, among the six authors we've never discussed the politics," Moses says. "The remarkable thing about this process which has gone on now a number of months is that we have avoided politics. I suspect we each have very different views of the role of the federal government and all of the contentious issues that we confront. Our goal was to be decidedly non political but to be as objective as possible in putting together an array of publicly available information that can be used by anybody for any purpose."

So how can we create a substantive dialog on the real factors pushing healthcare cost growth? Rather than looking to the politically paralyzed federal government for solutions, Moses says healthcare executives and clinicians must take the lead, particularly on issues such as improving care processes.

A good starting point, Moses says, is to press for adding more primary care physicians into the healthcare system to direct wellness regimens and coordinate treatment when patients become ill. His study notes that while 4% of healthcare spending goes to biomedical research, only 0.1% goes to improving the process of care.

"The innovation that has to occur here to solve any of these problems in my view, personally, should come from the private sector," Moses says. "The private sector has largely not been a participant in care process innovation. There are very few appropriations for it. The question is 'will innovations in health services occur by virtue of investment by health systems?' The Mayo Clinic, Geisinger Health System, [and] my own institution at Johns Hopkins have historically, for decades, invested in care process innovation. However it has not been widespread. It must be now."