Article of the Week: Major Trends in US Health Care

by Fareed Saleh 

Here you'll find a copy of "Major Trends in the U.S. Health Economy since 1950," by Victor R. Fuchs, Ph.D. The piece, which was originally published in NEJM (March 15, 2012), is a worthwhile examination of health expenditures over the past 60+ years. 

A few highlights: (i) Given that health expenditures currently account for more than 17% of U.S. gross domestic product (GDP) compared with 10-11% of GDP in other developed nations, it is interesting to see that the two main drivers for such growth are (1) the availability of new medical technology and (2) the spread of public and private health insurance. Erroneously, people have cited the aging U.S. population as well as the quantity of medical care used as major drivers of overall cost, both of which play a role but to a lesser degree. (ii) Despite all of the changes in health policy, medical innovation, sources of payment and the medical landscape as a whole, the bulk of expenditures has always been attributed to hospitals, physicians and drugs. 

While this isn't too surprising, Dr.Fuchs points out that the ratio among these expenditures has remained remarkably stable (hospitals:physicians:drugs being 3:2:1) since 1950. It is awesome to think that no matter what phenomenon occurred that resulted in driving down health care costs, be it a decrease in length of stay or total hospital admissions, these changes have been more than offset by other factors (i.e. the average severity of patients' conditions on admission increasing significantly) to maintain this ratio. 

I don't want to spoil anymore for you. It's a quick read and offers great perspective when discussing how to manage costs going forward. Have a great week.