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Healthcare Spending is on the Rise. Here’s How We Need to Adapt.

Dave Wright, Senior Vice President, Client Services, GetWellNetwork

Just last month, Health Affairs released a report projecting a 5.5 percent average annual growth in U.S. healthcare spending for 2018–2027. Further, the report notes that the cost of healthcare goods and services will increase 2.5 percent each year, “faster than the average price growth experienced over the last decade.”

This report itself is not surprising. Healthcare spending has been above the GDP for quite some time due to a number of factors including increased cost to provide medical care and cost of pharmaceuticals. Cost shifting is also on the rise as an aging population transitions to become government-sponsored patients. Further, declining health status of aging Americans, in part due to behavior-related conditions (e.g., diabetes, heart failure, complications from obesity, etc.), means increasing health care consumption and rising acuity levels (resulting in higher costs per capita).

This continued increase in spending has been projected for some time yet little has changed other than a greater proportion of the population is insured. Demographic factors and general health status will continue to be good predictors of healthcare needs and consumption under the current care delivery and payment models. 

In markets such as Canada, the UK, Australia and other countries where healthcare is predominantly government sponsored, there are controls over access that create long waiting times and serve to incentivize healthier lifestyles. While many health plans in the U.S. have put incentives in place (e.g., lowered premiums and/or increased out-of-pocket expenditure), they have not had the impact on changing individual behaviors at the level needed to lessen the disease or illness burden. The result: growth in healthcare spending that parallels the aging population.

The report indicates that 90 percent of the population is insured and will continue at that level as the population grows. Even with increases in co-pays or deductibles, the cost growth will only have a modest impact on those who do not utilize healthcare services regularly. Access will continue to be good for all who need and use services, but employers and/or insurers will still pick up the bulk of cost for the foreseeable future. So, while significant on the economy, this growth will not likely impact the individual patient.

All of that said, there is no question that this continuous increase in spending is not sustainable. Many initiatives have been tried with little success to slow or even reverse the growth curve. I believe that the key to turning around this unsustainable growth in expenditures is to bring patient engagement to the forefront of healthcare reform conversations. The individual person/patient must pay as much attention to their health status as they do their bank account. Until individuals clearly own responsibility for their own health rather than care providers lowering health care utilization and therefore, healthcare expenditures, will be an uphill battle.

At the end of the day, people must be engaged in their own health journey to make positive change when it comes to health care delivery. They must be motivated and committed to changing their health behaviors to minimize the likelihood of obtaining or worsening costly chronic conditions requiring long-term management. The individual who proactively manages their health will see better health outcomes and in doing so, will lessen the need for acute health care intervention with the associated cost.

Further, if the individual patient is living a healthy lifestyle and is motivated by what’s most important to them, their level of satisfaction with the healthcare system will be/remain high. Not only does this foster continued engagement, better outcomes mean lower hospital readmissions and/or setbacks, lower costs and happier, healthier patients for years to come.

There’s no doubt today’s healthcare delivery system needs reform. I believe that reform starts with patients that are activated, engaged and empowered to own their individual healthcare journey.