As 2020 draws to a close, it will be a year we’ll never forget, though we wish we could. We’d like to pause and reflect on the many things we can be thankful for, and on the hope that the next year holds with the distribution of COVID-19 vaccines.

We wish all of you a safe, healthy and restful holiday season.

Digging Deeper

In two articles, we examine the state of our health spending and potential solutions to more sustainably fund the innovative treatments and cures we need.

Preserving and Funding the Next Phase of Innovation

Now, more than ever, we are witnessing just how transformative biomedical innovation can be for society. Our hopes for returning to “normal” life – businesses fully open, travel, plays and movies in theaters, fans in sports arenas, hugging friends we haven’t seen in a while – hinges in large part on a COVID-19 vaccine. The arrival of these vaccines reminds us how important it is that our health system maintains structural incentives for these groundbreaking developments to become reality.

Typically, some of the insurance premiums we pay partially fund new health care technologies and devices. But with health care expenditures projected to reach 20% of our GDP in the next decade, how sustainable is this system?

Before the onset of the pandemic, the National Pharmaceutical Council conducted a survey to assess U.S. payers’ and consumers’ willingness to pay for new therapies for chronic adult, pediatric or geriatric populations as well as rare diseases. The results? Neither the payers nor the consumers wanted a 5% increase even if it supported access to new health technologies that would improve outcomes and quality of life.

Why it Matters: Employers and consumers want access to new health care treatments and technologies, but the evidence shows they no longer want to continue to bear that cost burden. Given continually increasing premiums, it is no wonder these stakeholders feel tapped out. We know innovation is essential, so where do we go from here to make sure we have it?

As policymakers consider how to keep costs in check, we must ensure that any effort considers the value treatments deliver for patients and society overall. Sadly, low-value care plagues our health system, draining limited dollars to pay for services that do not provide patients with real value. The good news is that there is significant support for treatments that make broad improvements in public health, although respondents were not very willing to pay more for it. The NPC survey found that respondents were more willing to pay for new medical technologies for common adult diseases, such as diabetes and heart disease, compared to less common pediatric or geriatric conditions. We must find ways to devote resources to high-value care and protect incentives for innovation that help vulnerable and disenfranchised groups, instead of continuing to do the unsustainable: push costs onto employers and consumers.

After COVID, the Work Continues

According to the latest National Health Expenditure data released Dec. 16 by the Centers for Medicare and Medicaid Services, health spending grew by 4.6% in 2019. It is not surprising that costs continued to rise in 2019, as these numbers do not reflect the COVID-19 pandemic. A recent article from the Kaiser Family Foundation revealed that in 2020, health services revenues have fallen by 2.4% compared to last year. Ambulatory care settings such as physician offices and outpatient care centers saw the largest drop in utilization (4% and 4.7%, respectively). Though the use of telehealth rapidly increased, it did not make up for the loss of in-person visits.

No one should celebrate reducing health spending this way, because it means patients are skipping important care. As of late April, according to an analysis by Epic Health Research Network, cancer screening rates have fallen rapidly, with patients more hesitant to leave home due to COVID-19. A follow-up review by the organization estimated there has been 285,000 missed breast cancer screenings, 95,000 missed colon cancer screenings, and 40,000 missed cervical cancer screenings so far in 2020.

Why It Matters: A reduction in overall care does not necessarily translate to the elimination of low-value care. Due to the pandemic, patients opted out of both necessary and unnecessary services. While a decrease in low-value care services is a step in the right direction, missed high-value care services such as cancer screenings will have long term impacts on our system, and more importantly, on patient outcomes. As our health system recovers from this public health crisis, we must continue to persuade clinicians and policy makers to stay focused on optimizing our system to promote high-value care.

What We’re Reading 

  • McWilliams JM, Chen A. Understanding The Latest ACO “Savings”: Curb Your Enthusiasm And Sharpen Your Pencils—Part 1. Nov. 12, 2020. Health Affairs Blog
  • McWilliams JM, Chen A. Understanding The Latest ACO “Savings”: Curb Your Enthusiasm And Sharpen Your Pencils—Part 2. Nov. 13, 2020. Health Affairs Blog
    The Center for Medicare and Medicaid Services recently reported that the Medicare Shared Savings Program (MSSP) generated $2.6 billion in gross savings in 2019 and $1.2 billion in net savings after considering share-saving payments to accountable care organizations (ACOs). In a two-part Health Affairs article, researchers from Harvard University and the University of Southern California dig deeper into the MSSP performance data to make recommendations to further improve the program.
  • Neumann P, et al. Consideration of Value-Based Pricing for Treatments and Vaccines Is Important, Even in the COVID-19 Pandemic. Nov. 19, 2020 Health Affairs
    When it comes to vaccines and novel therapies, “There are no easy answers to pricing in a pandemic,” the study notes. “The policy puzzle involves striking an appropriate balance between lower prices today (to ensure access to essential tests, vaccines and medications) and adequate revenue streams that incentivize manufacturers to make the substantial, risky investments needed to develop those drugs in the first place.”

Dialogues on Health Spending

  • Present and Future Impacts of COVID on Health Spending: NPC and AcademyHealth hosted a “virtual” salon that focused on how health systems have adapted to deviations in care and utilization, how the overall healthcare marketplace might adapt (or not) to changes in telehealth, staffing and scope of practice, and potential downstream impacts on health spending policy and actions. The conversation revealed several practical implications and warnings for future health policy and spending discussions. View the summary of the conversation.