Going Below The Surface E-newsletter: March 2020
March 17, 2020
COVID-19 is clearly the topic of the moment, and we hope that you and your loved ones remain safe and healthy during this challenging time. Our monthly rundown of health spending research is unlikely to fully meet your informational need on that subject, but we applaud the many news organizations that are offering free access to their COVID-19 coverage, along with the universities that have created online hubs to explain the science and public health implications (see Johns Hopkins and the University of Minnesota). For data visualization (and the source behind many of these interactive sites), check out ESRI’s resources.
In the health spending space, we’re tracking a series of research papers in The Journal of the American Medical Association that analyzed health spending, including a study about segmented health spending and an editorial in response to the JAMA series.
A new study by Dieleman, et. al. analyzed total U.S. health spending between 1996 and 2016 broken down by payers and disease conditions, providing a granular look at the question of where our money is being spent. Unsurprisingly, the findings show that spending is not distributed equally among public insurance, private insurance and out-of-pocket payments, nor are all conditions created equal when it comes to the U.S. total cost burden.
According to the researchers, total spending more than doubled between 1996 and 2016, and public payers saw a greater increase in spending than commercial plans. Lower back and neck pain management accounted for the highest amount of spending in 2016, totaling $135.5 billion, followed by other musculoskeletal disorders that added up to $129.8 billion. Private insurers contributed to the majority of this spending. Diabetes management also was a significant cost driver, accounting for $111.2 billion, which was predominately spent by public payers.
The study was one of several about trends in biopharmaceutical R&D, drug pricing and industry profitability published in the March issue of JAMA. The articles came with a healthy debate from Merck CEO Kenneth Frazier, who argued in an editorial that the methodologies required further examination, highlighting – for example – that the JAMA analysis of net and list prices failed to reflect “the most critical pricing issue”: out-of-pocket costs for patients.
Frazier also suggested five solutions that the biopharmaceutical industry should adopt, including a focus on patient affordability, reforms to the drug-rebate system, an end to “inappropriate gaming the system” around intellectual property, and a move to value-based contracts. But it was Frazier’s fifth proposal that most caught our eye: the need for “collaborating across system stakeholders to reduce the cost and complexity of health care.”
Why it Matters:
Health spending is often viewed in the aggregate, but the Dieleman research demonstrates that the challenges with health spending are not evenly distributed, suggesting that solutions, too, must be tailored. The Dieleman work highlights some of the areas that deserve further analysis, though recent studies (see What We’re Reading, below) have underscored the need to fully vet even narrowly focused approaches that appear to be – but are not always – slam dunks.
Additionally, tackling health system changes will require all stakeholders to do two things: identify the places where they can make an impact individually and commit to finding ways to work collaboratively. Frazier’s article raised important questions about how the biopharmaceutical industry can act differently – through the prevention of price-gouging or by enabling value-based health care – while also suggesting policy solutions and a willingness to partner.
Many of us who follow health care policy developments are hoping to find that silver bullet – the one program that will significantly reduce costs and unnecessary spending. While many programs show promise, they often have limitations or require further study. The articles below highlight promising approaches, but with noted limitations. They’re still worth a read.
Here are a few health spending-related activities to check out that don’t require virtual fist bumps or close contact with other people to enjoy. And that also applies to dropping us a line or tweeting using #GoingBelowTheSurface if you have health spending news or events you’d like us to share.