The Roundtable on Population Health Improvement, a convening activity of the National Academies of Sciences, Engineering, and Medicine, held a workshop on March 15–16, 2021, to explore issues related to increasing health care spending in the United States. The workshop, U.S. Health Care Expenditures: Costs, Lessons, and Opportunities, was organized to highlight the persisting challenge of health care expenditures that are not commensurate with the health outcomes they produce (IOM, 2012).
The workshop highlighted the rationale for controlling wasteful (i.e., non-health-producing) health care spending—specifically, that it affects health equity, quality, and outcomes and leads to opportunity costs such as a reduced ability to invest in public health infrastructure and in the social factors that support health and well-being. The workshop was also intended to showcase innovative examples, such as state-level target setting for health care cost growth; to explore communication strategies to further the goal of reducing health care spending; and to highlight areas for research.
In his welcome, Raymond Baxter, a trustee of the Blue Shield of California Foundation and a member of the board of directors of the CDC Foundation, said that the roundtable recognizes that health and
1 The planning committee’s role was limited to planning the workshop, and the Proceedings of a Workshop has been prepared by the workshop rapporteurs, with assistance by staff, as a factual summary of what occurred at the workshop. Statements, recommendations, and opinions expressed are those of individual presenters and participants and are not necessarily endorsed or verified by the National Academies of Sciences, Engineering, and Medicine, and they should not be construed as reflecting any group consensus.
quality of life are shaped by interdependent historical and contemporary factors. Therefore, the roundtable seeks to catalyze multi-sector, community-engaged, collaborative action to address health issues. Although the roundtable does not focus on health care reform or health care finance specifically, Baxter explained, it recognizes that health care spending is integral to issues related to the social determinants of health and to the well-being of communities. Health care spending shapes the economy, affects the finances of families, and has the power to limit public and private investment in child care, education, housing, and other essential services. Moreover, health care spending can reinforce structural inequities (in housing, education, etc.) that shape health and well-being (NASEM, 2017). Thus, health care expenditures are relevant to population health.
Despite the fact that the United States devotes one-sixth of its economy to health care, the health of the U.S. population ranks as poor compared to other wealthy Organisation for Economic Co-operation and Development (OECD) nations (IOM, 2012). Any prevailing policy and social conditions that fail to create equal opportunities for all people can influence health, cause disparities in life expectancy, and cost the nation both dollars and lives (IOM and NRC, 2013). Baxter described how the COVID-19 pandemic exacerbated the trend of decreasing life expectancy in the United States and brought into sharper focus the failure to invest in prevention and preparedness. Sanne Magnan, a senior fellow at HealthPartners Institute and an adjunct assistant professor at the University of Minnesota, agreed that U.S. life expectancy is not commensurate with the country’s level of health care spending, which is the highest in the world. For example, the United States ranks 33rd out of 36 countries for infant mortality, and African American infants die at twice the rate of white infants. She added that underinvestment in the public health system led to greater challenges during the COVID-19 pandemic.
Magnan emphasized that health care expenditures relate to medical and clinical services, not to the full scope of factors that generate population health. Health care spending in the United States has outpaced inflation for decades, with the result that such spending accounted for 17 percent of the gross domestic product (GDP) in 2019 compared with 6 percent in 1970. Switzerland has the next highest share of GDP allocated to health, at 12 percent. No incentives exist, Magnan said, to address health care’s increasing share of GDP in the United States or the estimated 25 to 30 percent of wasteful health care spending—that is, spending that does not result in improved health. Furthermore, she continued, spending on wasted administrative costs, high prices, and unnecessary services creates an opportunity cost, with less funding available for other areas that contribute to health, such as education and affordable housing. A decrease in per capita health care expenditures could enable investment in various upstream resources that would strengthen
population health. Magnan observed that every dollar spent on wasteful health care spending is a dollar that cannot be spent on public health, education, universal health coverage, early childhood education, job development, or livable wages. Some worry that reducing health care expenditures would result in decreased medical coverage, she said, but she suggested that the opposite is true—because accessibility is related to affordability, reducing per capita health care expenditures will make it possible for more people to access care. Magnan closed with a recent quote from David Cutler:
The Biden administration is putting all resources possible into the fight against COVID-19, something everyone hopes is successful. But that is not the only health care challenge that the administration will need to tackle. It should devote just as many resources to lowering unnecessary spending on medical care. Doing so is among the most important steps the new administration can take to promote widespread economic prosperity. (Cutler, 2021, p. 2)
Sarah Gollust, an associate professor in the Division of Health Policy and Management of the University of Minnesota School of Public Health, listed several factors involved in driving a shift toward investing in health and health equity: bold and innovative leadership; governance strategies to support leadership; evidence to identify low-value and high-value services and programs; the political will to align public policy incentives toward strategies that improve population health; and transparent communication with the public about costs and trade-offs in order to achieve a shared understanding of the problem and the need for solutions.
The charge to the planning committee is provided in Box 1-1. The planning committee was chaired by Sanne Magnan and included Rachel Block (Milbank Memorial Fund), Adam Bress (University of Utah), Marc Gourevitch (New York University [NYU] Langone Health), Meg Guerin-Calvert (FTI Consulting), Dora Hughes (George Washington University), Eric Schneider (The Commonwealth Fund), Kosali Simon (Indiana University O’Neill School), and Lauren Taylor (NYU Langone Health). The workshop was structured in four sessions held over 2 days in a virtual format, featuring invited presentations and discussion that focused on:
- The rationale for addressing wasteful health care expenditures (HCE, including opportunity costs such as investing in public health infrastructure and education, among other social determinants of health;
- National, state, and local frameworks and models for helping the United States achieve parity with comparable OECD nations in HCEs, including the work of states in setting targets for health care cost growth;
- Strategies to reframe the narrative (i.e., the common but erroneous conflation of health and health care) to further the goal of reducing HCEs (the total cost of health); and
- Research, including modeling, that needs to be done to inform community-level investments once HCEs are decreased in order to achieve better health, well-being, and equity.
The workshop was structured to begin with economic perspectives in order to frame the problem of high HCEs, after which the workshop would explore innovative approaches to bend the spending curve, examine the narrative about health in the United States, and conclude with research priorities moving forward. In accordance with the policies of the National Academies, the workshop did not attempt to establish any conclusions or develop recommendations about needs and future directions, focusing instead on issues described by the speakers and workshop participants. In addition, the organizing committee’s role was limited to planning the workshop. The proceedings of the presentations and discussions held at the workshop was prepared by designated rapporteurs in accordance with institutional guidelines.
This publication is organized into five chapters. After the introductory chapter (Chapter 1), chapters 2 through 5 include both opening remarks and presentations given by a panel of speakers, followed by a discussion that integrates questions from the virtual audience and panelists answers. Chapter 2, titled Economic Perspectives Framing Health Care Expenditures, provides an overview of the scope of health care spending in the United States and discusses the opportunity costs associated with high health expenditures in terms of the benefits that redirected spending might elicit. Chapter 3, Innovation to Bend the Spending Curve, details innovations being implemented to address sustainable health care spending. Chapter 4, Framing and Shifting the Health Narrative in the United States, explores beliefs that contribute to the intransigence of increasing health care spending and suggests narrative changes to shift these perspectives. Chapter 5, Research Priorities, outlines current areas of study, data challenges, and the role of research in policy change. References are provided in Appendix A, planning committee biographies can be found in Appendix B, the agenda for the workshop is in Appendix C, and recommended readings and resources are available in Appendix D.