COVID-19 has changed many of our routines, from video meetings to homeschooling; our daily life has been interrupted in ways we never anticipated. This month, we explore the disruption this pandemic has caused our health system. As hospital spending increases due to the influx of ill patients, spending trends might be less predictable in other sectors across the health system. We also unpack U.S. social services spending data to understand why, despite pouring trillions of dollars into our health system, the United States faces poorer health outcomes when compared to other developed nations.

And while you’re stuck sheltering in place, check out last weekend’s One World: Together At Home concert to help fill the void in-between Zoom happy hours. In the meantime, keep reading for your monthly dose of all things health spending…

Digging Deeper

The Role of Value in a Post-Pandemic World

The Centers for Medicare and Medicaid Services released its National Health Expenditure data on March 24, projecting that spending on health care will increase by 5.4%, on average, between 2019 and 2028, representing 19.7% of gross domestic product by the end of that period. Sound familiar? However, it should be noted that this latest projection fails to include the effects of the COVID-19 pandemic. While COVID-related hospital spending will likely continue to climb, it is unclear how long the hospital industry will experience decreases in the number of elective procedures or outpatient visits. When this public health crisis passes, we need to engage in critical discussions to reevaluate how we spend our health care dollars, with the goal of maximizing value.

One model to consider was developed by Suzanne Delbanco, executive director of Catalyst for Payment Reform, and Mark Fendrick, director of the Center for Value-Based Insurance Design at the University of Michigan. Their V-BID X for Employers framework promotes employer insurance coverage of high-value products and services, like test strips for diabetics, antiretrovirals for the treatment of HIV and antipsychotics. Models like this can help health care stakeholders identify and provide coverage for high-value care in our post-pandemic system.

Why it Matters:
The COVID-19 environment is devastating for our health system. Our priority, rightfully so, has been to optimize care to eliminate the virus. But as we march forward, we have the opportunity to see the impact of what targeted spending can yield. Once we contain the virus, how should our health system proceed? Initially, paying for known high-value services should rise to the top of our priority list once more. However, as we consider long-term changes to our system, we will need to more fully understand how the forced resource shifting has affected our health care system and Americans’ health outcomes. We should use that data to make decisions around how to prioritize our spending and create a system of high-value care.

Pulling Back the Curtain on Social Spending

The United States spends more money on health care than any other developed nation in the world, while also producing lower than average outcomes. Some people mistakenly attribute this result to a perceived low investment in U.S. social services. A recent article published in The New England Journal of Medicine found the United States actually spends similar amounts of money on services such as housing, nutrition and education than other countries. So, what is responsible for the worse health outcomes?

The researchers found that the United States spends significantly less on social support for younger and working-age citizens, including programs geared toward early childhood education, parental leave and child financial support. Instead, when compared to other countries, spending is higher for older Americans, a strategy that the authors call “too little, too late” to produce long-term health for the nation.

When we dig deeper into the nuances of U.S. social spending, we can make informed assumptions about our current health outcomes. The number of dollars spent might be comparable to other nations, but where these dollars go differs. It’s important to know where those dollars will have the most impact.

Why It Matters:
The only way to understand if our investment in social services is successful is to comb through the data and honestly assess where we are getting the best societal outcomes. This is research we can undertake now. To learn more about how to identify effective interventions, The Going Below the Surface Forum has partnered with the nonprofit research and consulting organization, Altarum, to conduct a literature summary that sheds light on what works, what strategies save money and how long it takes to see savings. The goal is to ultimately inform discussions around where we get the biggest bang for our social services buck.

What We’re Reading

The Health Affairs Blog provides us with two articles to ponder – one on considering “indirect benefits” when it comes to valuing treatments, and another that calls for us to look at pricing issues in a different way.

  • Ciarametaro M, Buelt L, Dubois RW. Getting Value Right: The Case For Indirect Benefits, March 19, 2020, Health Affairs Blog
    How can health care decision-makers assess the true societal value of prescription medicines and medical services? According to the study, the key is to use a comprehensive approach to measuring value, which takes into account a wide range of potential implications and benefits associated with a medical treatment. This includes incorporating less tangible, patient-centered outcomes often referred to as “indirect benefits,” such as improvements in quality of life, productivity and caregiver burden. In the current COVID-19 crisis, it’s becoming evident that the impact of a disease on productivity is real and quantifiable.
  • Shah SA, Chernew ME. Prices Are Not “Reimbursements,” March 13, 2020, Health Affairs Blog
    The authors dig deeper in thinking about the prices charged by health organizations and whether or not they are linked to the underlying costs to provide a service or the quality of that service. In less competitive markets with higher prices, costs typically rise—meaning those organizations have less pressure to be more efficient. They argue for setting “prices (and methods of payment) to balance access and quality goals with budgetary concerns.”

Dialogues on Health Spending

We’re no longer standing around the office water cooler and talking about “The Tiger King” or recent movies, but we are talking a lot via social media and other online means. It’s in those online places that we’ve seen some important dialogues taking place about COVID-19 and health care spending considerations. 

  • Choosing Wisely in the Face of COVID-19 for Employers. The National Alliance of Healthcare Purchaser Coalitions hosted a webinar to help employers better manage and communicate the impact of COVID-19 to their workforce. The webinar also explored “how employees and their families can partner with their doctors through shared decision making on care decisions related to Covid-19 using the Choosing Wisely 5-Question Framework.” View the archived webinar on the National Alliance’s website.
  • Tradeoffs In recent weeks, the Tradeoffs podcast has turned its focus to coronavirus, “featuring conversations with people who are being forced to make difficult decisions in a rapidly evolving situation with many unknowns.”