Getting Warmer: Health Expenditure Trends and Health System Reform

The passage of the Affordable Care Act in 2010 spurred a decade of payment reform efforts intended to shift the health care system from volume-driven Fee-For-Service payments to alternative payment models (APMs) with reimbursement linked to quality and outcomes. A principal goal of these efforts was to encourage the most efficient use of health care resources and control the growth of health care costs. While bending the cost curve has been the raison d’être for many health policymakers for decades, accurately measuring the impact of any single reform effort has been challenging to say the least.

The ACA was a massive piece of legislation that impacted several parts of the health care system simultaneously. It was implemented on the heels of one of the deepest recessions in the nation’s history and was followed by another major piece of health care legislation in 2015 titled the Medicare Access and CHIP Reauthorization Act (MACRA). In short, measuring the impact of the last decade of reform efforts is a far cry from the randomized control trials used to prove the efficacy of a new drug or procedure. Overlapping model interventions, changes in existing payment policies, broad macroeconomic forces, improvements in the standards of care, and a host of other factors affect the ability to make causal inferences in this space. While difficult to quantify with precision, it is clear that the delivery system’s transformation to value-based payments over fee-for-service payments which incentivize volume of care is a contributing factor to the favorable spending trend.

The Health Care Transformation Task Force released a paper examining long-term trends in health care spending from 2000 to 2020. While the impacts of individual reform efforts may be impossible to fully quantify, the broader direction of health care spending offers a useful, though blunt, barometer for the overall impact of changes in the health care system. In short, when it comes to the goal of bending the cost curve, are we getting warmer or colder? This evaluation of NHE trends found a systemic slow-down in both projected and actual health spending over the past decade. Furthermore, we believe that payment reform efforts have been a contributing factor to this slowdown. While reform efforts have rarely taken the most direct route, it appears that the system is indeed getting warmer to the goal of slowing spending growth.

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