Graph of the Day:  Health Care, Meet Debt

By Aaron Sinner, Hindsight Community Fellow, January 10, 2012 at 8:30 am

Today’s graph looks at the drivers of future U.S. government debt. As Minnesota 2020 has discussed previously, getting a handle on our debt boils down to getting a handle on our health care expenses.

[ graph -- click title to view in browser ]

It’s important to remember that though this graph looks at federal spending alone, most factors outside the government’s direct control drive increases in health spending. Health spending will be going up across the U.S. economy at a similar rate.

This is significant because many proposals—including changing Medicare to a voucher-like program and raising the Medicare eligibility age—save the government money without reducing costs. Instead, they just push those costs off of government balance sheets and onto the backs of U.S. citizens.

How can we bend the cost curve?

The 2010 health reforms include some important initiatives that could certainly help. For instance, the Patient-Centered Outcomes Research Institute will provide funds and an organization dedicated to coordinating information regarding which treatments and procedures are most effective and which offer no real benefits. We could take this research a step further by tying dollars and reimbursement rates to effective procedures.

A second reform to save money and improve care grows from the new regulation for Medicare reimbursement of end-of-life consultations between patients and doctors. These consultations are crucial for saving money and improving care, as they ensure doctors will administer just as much end-of-life care as patients desire, and no more. In the absence of such consultations, physicians tend to keep fighting to preserve a life until the bitter end, even when that life might include a brain-dead patient hooked up to an iron lung. With such consultations, end-of-life costs have been seen to drop by 35%.

End-of-life care could be further improved while saving money if these consultations were encouraged, or if Medicare were to fully fund Hospice care—which stresses developing a living will and other end-of-life plans—concurrently with other medical care for patients with a life expectancy of under one year. Such a program has previously lowered spending by almost 25%.

While certainly worthwhile, these changes act within the current system. Tomorrow, we’ll look at another health cost graph and discuss ways to realign flawed incentives in the U.S. health system.

Posted in Health Care | Related Topics: Federal Government  Health Care Reform