When it comes to America’s healthcare costs, demographics are threatening to be destiny.
It’s been 62 years since the 1946 start of America’s post-WW2 baby boom – the youngest Boomers, those born in 1964, turn 50 this year. The impact of aging Boomers constitutes a potentially ominous trend for the US economy; the healthcare needs of the 28% of Americans who were born during the boom will rise as they age.[1] Add to this demographic bubble the fact that Boomers are living longer than did their grandparents – life expectancy for Americans is now 77.6 years, up from 66.7 in 1946 when the boom started – and the US is confronted with an increasing number of older Americans who will, inevitably, need medical care – and who will need it for a long time.[2] [3] [4]
When the first Boomers turned 50 in 1996, the age at which an individual’s health care expenses start to accelerate, per capita healthcare spending was $2,400 and total spending was just shy of 14% of US GDP. [5] [6] [7] Fifteen years later, in 2011, when these Boomers turned 65, per capita healthcare spending had grown to $8,680 and total spending to 17.9% of GDP.[8]
Sharply rising healthcare costs have significant, adverse implications for individual households as well as for the US economy as the price of care outstrips the ability of the average American household to pay for it. Economists foresee a net decline in real wages for the nearly 60% of Americans younger than 65 who receive their health insurance through their employers as insurance premiums rise fast than does total compensation. [9] Households are at risk not only from rising premiums but also from the trend among private employers to switch to less generous plans in an effort to mitigate this steep rise in premiums; the larger out of pocket requirements of these plans has the effect of cutting workers’ real wages, leaving fewer dollars to meet other household expenses.[10]
To address this widening divergence between healthcare needs and Americans’ ability to pay, public and private payers are gradually eliminating the input-oriented fee-for-service model and replacing it with payment frameworks that reward health outcomes and that are grounded in value metrics that are grounded in empirical data. A recent nationwide survey of Blue Cross Blue Shield carriers calculated that they are now paying 20% of their reimbursements under value-based payment models.[11]
But implementing these new payment paradigms, and achieving the goal of better outcomes at lower cost, requires data – accurate, relevant data that will be the basis for developing continually updated evidence-based metrics. Providers, healthcare systems and public and private payers will be called upon to collect clinical and population data and to share it in order to build the database that will underlie quality and performance metrics and which will inform medical decision-making.
Collecting and analyzing the data will require innovative health information technologies that can build a real-time view of individual patients’ health as well as of population health and which will make actionable information available at the point of care.
Building and adopting these technologies will not be easy – early efforts to encourage providers to adopt health information technology have been met with a host of problems including steep initial capital outlays, the time and financial burden of entering historical paper-based data into the new software, the need for staff training, and software designs that often are incompatible with other systems and whose designs do not follow clinical processes. [12]
Despite these obstacles, payers are clearly pressing forward with health information technology. CMS is working with providers and their professional organizations to facilitate the implementation of certified electronic health records, accommodating some requests for changes in the program, but emphatically moving ahead with the fundamental requirements and goals of the initiative. In the private sector, two of California’s largest insurers, Blue Shield of California and Anthem Blue Cross, announced earlier this month that they will go live in November with a new health information network.[13] When it launches, the system, California Integrated Data Exchange (Cal Index), will be one of the largest health information networks in the US, incorporating the medical records of nearly 9million of the carriers’ members. The insurers anticipate that hospitals, providers and other carriers in California will, over time, participate in the exchange.
The ubiquity and increasing power of smart phones is already driving the development of health information applications for the full range of platforms – the Web, messaging systems, PDAs and cell phones.[14] The mobile applications being developed include those that allow patients to self-monitor and transmit to their provider real-time health information such as blood pressure or blood sugar levels, that allow patients to link to their electronic health records through a secure portal, and that helps patients connect with social networks that can support their efforts to manage their own health.
Baby Boomers changed America in the decades after WW2, driving the US economy forward as their parents purchased an expanding array of capital and consumer goods and as the nation built large-scale public and private facilities to meet the needs of this young generation. It seems that the Boomers will be changing American again in the 21st Century as their increasing need for health care services at an affordable price will drive forward the development and adoption of electronic health information.
There’s about to be an app for that.
___
[2] https://www.health.harvard.edu/press_releases/average-life-expectancy
[3] https://www.infoplease.com/year/1946.html
[4] https://www.forbes.com/sites/danmunro/2012/12/30/2012-the-year-in-healthcare-charts/
[6] https://meps.ahrq.gov/data_files/publications/hl12/hl12.shtml
[7] https://www.whitehouse.gov/assets/documents/CEA_Health_Care_Report.pdf
[8] https://www.cdc.gov/nchs/fastats/health-expenditures.htm
[9] https://www.whitehouse.gov/assets/documents/CEA_Health_Care_Report.pdf
[10] https://www.whitehouse.gov/assets/documents/CEA_Health_Care_Report.pdf
[14] https://healthit.ahrq.gov/key-topics/consumer-health-it-applications