Going Beyond the Headlines on Health Spending in 4 Steps

Health care spending in the United States is at the center of a loud, fractured debate mired in deep complexity.

Anyone who watches the headlines on health spending will see a parade of usual suspects cited as the problem. A headline from STAT points to rebates: “Wholesale Drug Prices May Be Rising, but Rebates Are Taking a Bigger Bite.”¹

The Los Angeles Times blames hospitals: “Allegations of a Hospital Chain’s Ruthless Price-Fixing Explain Why You Pay So Much for Healthcare.”²

Forbes scapegoats pharmaceutical companies: “As Specialty Drugs Gain Share, Trump Looks to Curb Prices.”³

Often the headlines can make the problem itself a moving target. A Health Affairs blog post⁴ sounded the alarms in “National Health Expenditure Report Shows We Have Not Solved the Cost Problem,” while the same data set was used in an American Medical Association piece that came to the opposite conclusion: “Growth in Health Spending Slows in Post-ACA Era.”⁵

Sometimes headlines even create ambiguity on what problem we need to solve. “Are Drug Prices Too Low?” asked Bloomberg.⁶

Part of the reason for the confusion is that policy makers and industry players are not working from a common set of facts and assumptions about the health care system, blinded somewhat by a desire for quick answers and clear villains.

When it comes to health spending, real problem solving will happen only if all stakeholders dig deep into the issues at hand within a broadly understood framework. To open new doors in finding common ground in the debate, we need to make progress in how we assess, analyze, and apply the evidence and data around health spending.

To do that, we must prioritize 4 efforts.

1. First, we need to zoom out and look more broadly at a complete picture of the patient care continuum and how each piece fits with the next. Drug spending, hospital-based care, and post-acute costs do not happen in a vacuum. A dollar spent in any of those areas will inevitably affect spending in other areas.

Ignoring that point, because it’s either complex or ideologically convenient, robs decision makers of a clear picture of where we get the most value for our health care dollars. And if we really want to come up with solutions that will work in the real world, the patient experience must be included in the equation of what is truly valuable.

If we focus on only 1 area of health care, we might miss the benefits that other sectors bear on improving health, reducing costs, and weeding out low-value services we know are deeply embedded in the system.

2. Second, we must get better at gathering and evaluating the evidence that informs the discussion. Sharpening our focus and taking a critical eye to the data and statistics that drive headlines are vital.

Take, for example, the discussion generated by the recent Journal of the American Medical Association (JAMA) article⁷ comparing health spending in the United States with that of other countries using data from the Organisation for Economic Co-operation and Development. The article asserts that because of higher prices, salaries, and administrative costs, the United States spends more on health care. It’s quite a powerful statement and reinforces conventional wisdom.

It might not be entirely true. We can see that the study did not include prices for any service category and infers prices based on expenditures, among other serious limitations. Therefore, using the JAMA conclusions to make bigger assumptions about health care spending in the United States could inadvertently point us toward solving the wrong issues.⁸

To be sure, we are always at the mercy of our data sets, and this is not a call to toss out any paper that does not meet some standard of analytical perfection. But to the extent that research is used to create headlines or policy, the community must be attuned to those limitations.

3. Third, going deeper on the debate around health spending requires that we stop confining our view on costs and outcomes to 1 moment in time. Although looking at short-term costs of treatments may be the actuarial imperative for payers, the patient benefit and the reduced costs that come with better health may come years later.

According to a recent analysis,⁹ patients switch insurers frequently over a lifetime, and the payer that initially covered that patient’s care may never see the cost benefits of avoided care. There is a clear social and broader health economic imperative to include those delayed benefits in the health spending discussion. Excluding these data would be like writing a book review without reading the end of the story.

4. Fourth, the ability to critically evaluate existing research and generate new, high-quality research data requires that we broaden the range of stakeholders in any given discussion, especially when there are competing interests. We must move beyond point-counterpoint conflict to closely examine the ways in which different groups have different language and different assumptions that may color how they view the conversation.

When we have stakeholders with myriad perspectives at the table, engaged in real partnership, it helps all involved sidestep the usual talking points and finger-pointing and accelerates our momentum toward solutions and problem solving.

The good news is that as the debate on health spending has grown, we’ve seen a shift and new openness among stakeholders to engage. At the National Pharmaceutical Council, we started the year with a new endeavor—a research-first initiative to answer the hard questions on health spending called Going Below the Surface. We’re engaging with a wide range of organizations representing the payer, the patient, the provider, and research communities that are interested in advancing this discussion in a meaningful way.

By working side by side, we hope to get to the heart of the complex questions that can’t be answered in a headline. We need to dig deeper and get the full picture. Once that’s in focus, it will lead us to some evidence-based, commonsense solutions.

References

• Silverman, Ed “Wholesale drug prices may be rising, but rebates are taking a bigger bite.” STAT, March 30, 2018. Retrieved from: https://www.statnews.com/pharmalot/2018/03/30/drug-prices-wholesale-rebates-celgene/
• Hiltzik, Michael “Allegations of a hospital chain's ruthless price-fixing explain why you pay so much for healthcare.” Los Angeles Times, April 13, 2018. Retrieved from: http://www.latimes.com/business/hiltzik/la-fi-hiltzik-sutter-health-20180413-story.html
• Japsen, Bruce “As Specialty Drugs Gain Share, Trump Looks To Curb Prices.” Forbes, May 1, 2018 Retrieved from: https://www.forbes.com/sites/brucejapsen/2018/05/01/as-specialty-drugs-gain-share-trump-looks-to-curb-prices/#1f9b9cd617af
• Antos, Joseph R., Capretta, James C. “National Health Expenditure Report Shows We Have Not Solved The Cost Problem.” Health Affairs Blog, December 6, 2017 Retreived from: https://www.healthaffairs.org/do/10.1377/hblog20171205.607294/full/
• Robeznieks, Andis “Growth in health spending slows in post-ACA era.” AMA Wire, May 3, 2018. Retrieved from: https://wire.ama-assn.org/ama-news/growth-health-spending-slows-post-aca-era
• Koons, Cynthia “Why We May Lose Generic Drugs. Bloomberg, April 11, 2018. Retrieved from: https://www.bloomberg.com/news/articles/2018-04-11/are-drug-prices-too-low
• Papanicolas I, Woskie LR, Jha AK. Health Care Spending in the United States and Other High-Income Countries. JAMA. 2018;319(10):1024—1039. doi:10.1001/jama.2018.1150
• Greenwald, L., Graff, J., Wamble, D., Dubois, R. “International Health Care Spending Data: What They Can Tell Us, And What They Can’t” Health Affairs Blog, May 7, 2018. DOI: 10.1377/hblog20180430.6731
• Cutler, D., Ciarametaro, M.; Long, G., Kirson, N., Dubois, R, “Insurance Switching and Mismatch Between the Costs and Benefits of New Technologies.” Am J Manag Care. 2017;23(12):750-757