Innovation and Disruption

Analysis: Why the U.S. healthcare system will ultimately move to population-based primary care models

May 15, 2019 3:41 pm

Healthcare Dive is reporting: “Chronic medical conditions will hamper U.S. economic growth in the coming years by continuing to diminish productivity, contributing to early retirement and premature mortality and draining resources and income for those affected and the larger system as a whole, according to a new report from Fitch Solutions.

Healthcare costs associated with diabetic patients are more than double that of healthy Americans, says the article. Nearly one-third of diabetes-related costs are hospitalizations and prescription drugs, each. Also, nearly half of Americans have at least one cardiovascular disease. The economic burden of cardiovascular disease alone is expected to double by 2035 to more than $1.1 trillion. These leading conditions cost more than $1 trillion annually through hospitalizations, doctor visits, prescription drugs, medical devices and home care — 6% of GDP in 2016. 

Those costs aren’t limited only to patients or payers. Fitch Solutions said the spend is spread across society through medical treatments, less productivity, early retirement and premature death. Indirect costs through loss of income and reduced productivity cost $3.7 trillion, according to the report, and will double in 30 years due to the aging U.S. population and the resulting hike in non-communicable diseases.

Chronic illness is a significant cost burden, especially for Medicare. Payers are trying to bend that cost curve by implementing population health programs, value-based care programs and telehealth tools.”


You know what keeps me up at night? It’s the chart, “Federal Debt Given Different Rates of Excess Cost Growth for Federal Spending on Medicare and Medicaid” on page 25 of a Congressional Budget Office report. It shows three different scenarios for the U.S. Debt to GDP ratio (measure of a country’s ability to pay back its debt…higher is bad) based on various Medicare and Medicaid cost growth scenarios over the next 25 years. 

The worst case scenario gets us to a debt to GDP ratio that puts us in the same class as Japan (223% debt to GDP – stagnant economic growth) and Greece (180% debt to GDP – debt restructurings, creditor enforce austerity, 23% official unemployment rate). 

The U.S. may be “different,” as some allege, given we’re the world’s largest economy and the dollar is the reserve currency of choice (that’s not promised…British Pound was until 1945). 

However, at a minimum, a debt to GDP ratio that approaches even 150% will make the U.S. highly sensitive to increases in interest rates. And increasing debt service costs will crowd out other priorities (education, transportation, basic science research) that contribute to future economic growth. 

If the projections related to chronic disease above bear out, it significantly increases the odds the U.S. debt to GDP growth reaches unsustainable levels and negatively impacts the broader economy. And more importantly than the economic impact is the tremendous loss of human potential and productivity that comes with premature disability and death. Which is why I tend to believe, despite the halting progress, that we will eventually move to alternative payment models (APMs) where providers are responsible for the cost and outcomes of their patients with chronic conditions. While we’re lacking important details, the recently announced Center for Medicare and Medicaid Innovation’s Primary Care First and Direct Provider Contracting models are examples of what this might look like. 

Also, while APMs are necessary to manage the care for those who develop a chronic condition, I might suggest that we, as a society, need to look at a host of other policy areas to try to stave off the projections about chronic disease in the U.S. We could look at how we subsidize agriculture, education priorities (e.g., more PE to prevent early childhood obesity) and transportation policies. None of these things are “healthcare,” in the narrow sense of the delivery system, but they all ultimately have a greater impact on health. 



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