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Toxic Politics Hinder Debate on Healthcare Cost Drivers

John Commins, for HealthLeaders Media, November 13, 2013

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.
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