Elderly not driving healthcare costs, professional services do

Elderly not driving healthcare costs, professional services do, Treating the elderly didn't drive the U.S. increase in healthcare cost from 2000; 91 percent was from professional services, drugs and devices, researchers say.

Dr. Hamilton Moses III of the Alerion Institute in North Garden, Va., and the Johns Hopkins School of Medicine, and colleagues from The Boston Consulting Group and University of Rochester said their findings contradict several common assumptions.

For example, the analysis found personal out-of-pocket spending on insurance premiums and co-payments declined from 23 percent to 11 percent since 1980, contradicting the conventional wisdom that out-of-pocket spending has increased; and in 2011, chronic illnesses account for 84 percent of costs overall among the entire population, not only of the elderly. Chronic illness -- such as heart disease or diabetes -- among individuals age 65 and younger accounts for 67 percent of healthcare spending, Moses said.

The researchers used publicly available data, conducted an analysis to identify trends in healthcare from 1980- 2011.

The study found in 2011, U.S. healthcare employed 15.7 percent -- 21 million people -- of the workforce, with expenditures of $2.7 trillion, doubling since 1980 as a percentage of U.S. gross domestic product to 17.9 percent.

Between 2000 and 2010, healthcare increased faster than any other industry; health's proportion of GDP doubled from 1980-2011. Government funding increased from 31 percent in 1980 to 42 percent in 2011. Costs tripled in real terms over the past two decades. However, the average rate of increase declined consistently since the mid-1970s and sharply over the last decade.

Despite the increases in resources for healthcare, health outcomes such as life expectancy at birth and survival of many diseases trail peer nations, the report said

Fueling the changes in U.S. healthcare include: consolidation and fewer insurers and general hospitals -- but more single-specialty hospitals and large physician groups -- producing financial concentration in health systems, insurers, pharmacies and benefit managers; information technology; and the patient as consumer using social media, new public sources of information and self-management software -- outside traditional channels.

The researchers said at the highest level, the U.S. health system is struggling to adapt to competing goals, desires and expectations.

"The conflict among patient desires, physician interests and social policy is certain to increase. Those tensions will likely become a palpable force that may hinder care integration and inhibit other changes that favor improved outcome and savings," the authors said.

"The usual approach is to address each constituency in isolation rather than optimizing efforts across them. The triangle will need to be reconciled. This is the chief challenge of the next decade."

The findings were published in the Journal of the American Medical Association.