5 Things Being Discussed and Addressed in Healthcare Spending

As the conversation surrounding healthcare spending in the US persists, topics such as drug prices, increased annual spending, and government funding stay at the forefront. Here are 5 things about healthcare spending that are being currently discussed and addressed:

Report on National Health Spending

On Wednesday, CMS released its report on national health spending, which was published in Health Affairs. The report found that, by 2026, national health spending is projected to account for 19.7% of the economy, up from 17.9% in 2016. According to the report, this will be attributable to the projected average annual rate of national health spending being expected to grow by 5.5% on average from 2017 to 2026, outpacing average projected growth in gross domestic product (GDP).

A large driver of the rise in spending is prescription drugs. The report anticipates that prescription drugs will experience the fastest average annual spending growth over 2017 to 2026 (6.3%), due in part to spending on specialty drugs. Also driving the increase in health spending is spending growth in Medicare and Medicaid.

Drug Prices

Expressed in almost every healthcare spending conversation is frustration over constantly increasing drug prices. In an interview with Kaiser Health News, FDA Commissioner Scott Gottlieb, MD, vowed to combat high drug prices and take on drugmakers who are “gaming the system.” Gottlieb said he is bothered when brand-name companies use tactics to block makers of generics and biosimilars from developing drugs and voiced support over a free market for how products are priced. According to Kaiser Health News, several states are pushing for legislation that would seek permission from the Trump administration to import drugs from Canada, where prices are cheaper.

Last Friday, the White House’s Council of Economic Advisers released a white paper acknowledging concerns over drug prices. According to the white paper, the 2 primary goals are reducing the prices Americans currently pay and reduce the price of healthcare by raising innovation incentives for products in the future. The council proposed easing government regulations as well as changing how Medicare and Medicaid pay for drugs and how the FDA approves and regulates them.

2018 Budget Deal

After a brief shutdown last week, the Senate and House passed a spending bill, which was signed by President Trump the following morning. The 2-year spending bill includes $6 billion to combat the opioid and mental health crises, $4 billion to rebuild and improve veterans’ hospitals and clinics, and $2 billion for the National Institutes of Health.

Minority Leader Chuck Schumer, D-New York, explained that the deal also provides funding for community health centers, will help seniors who get caught in the Medicare Part D donut hole by easing the coverage gap, and extends CHIP for another 4 years, following the 6 years it was previously extended by Congress last month.

FY 2019 Budget Proposal

On Monday, the Trump administration released its FY 2019 budget proposal, which had several implications for healthcare spending. The budget requests $68.4 billion for HHS, a 21% decrease from 2017. To combat the opioid epidemic, $5 billion in resources would be allocated over 5 years. To reform drug pricing, the budget proposes giving the FDA greater ability to bring generics to the market faster, modifying hospitals’ payment for drugs acquired through the 340B program by rewarding hospitals for integrity, and calling for up to 5 states to test forming their own drug formularies and negotiating drug prices directly with manufacturers.

The budget proposes a 2-part approach to repeal and replace Obamacare, starting with legislation modeled closely after the Graham-Cassidy bill, followed by enactment of additional reforms to help set government healthcare spending on a sustainable path; Medicaid expansion would also be repealed. The Department of Veterans Affairs would receive $831.1 billion, an 11.7% increase in funding from 2017.

Addressing Healthcare Spending

During the AcademyHealth 2018 National Health Policy Conference, health spending was unsurprisingly the topic of several discussions. In the session When Are We Going to Get Serious About Healthcare Spending in the United States?, Robert Dubois, MD, PhD, chief scientific officer and executive vice present of the National Pharmaceutical Council likened healthcare spending to a Groundhog Day world, explaining to the audience that we keep having the same discussions about too much waste and low-value spending in the system. These conversations won't be easy, but we need to discuss how health spending should be allocated, as well as debate if we should shift money from end-of-life care or treatment for rare disease.

In an interview with The American Journal of Managed Care^®, Dubois discussed what the most important questions are that currently need to be addressed in the conversation about healthcare spending, as well as what the consequences will be if unchecked healthcare spending is not addressed.