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This Week in Health Care Reform: April 26th, 2019

Visits to the emergency room hit an all-time high, while utilization is found to differ across regions; ad spending by drugmakers undercuts their own defensive posturing; employers’ health care costs increase; and, the economic burden of caring for chronic conditions is projected to worsen.

Week in Review

ER Visits: Earlier this month, the CDC released a new report showing that emergency room (ER) visits reached a record high in 2016.  That year, alone, visits to the ER totaled 145.6 million patients, eclipsing the previous year’s total of 136.9 million.  The growth is significant, as data points to an alarming trend in the prices associated with those visits also going up.  And, one doesn’t need to look far to find examples of how these costs blindside patients.  A separate study examined how utilization patterns differ from region to region.  Published in JAMA, researchers discovered that, over the same study period, the rate of increase for rural ER visits outpaced that observed for urban visits to the ER.  The findings suggest a handful of worry items, including the continued deterioration of the primary care infrastructure in rural communities, worsening disparities for traditionally disadvantaged groups, and greater fragmentation of care.

Rx Ad Spending: Drugmakers have long pointed to their investments in research and development in seeking to justify their pricing determinations.  However, a new report undercuts that defensive posturing by simply drawing attention to just how much the industry spends on advertising.  To wit, pharmaceutical ad spending topped $6.4 billion last year, an increase of 4.8 percent over the previous year.  And, that spending is only projected to continue its upward trajectory as digital advertising for drugs and health care is expected to rise to $10 billion next year.

Employer Costs: People with health coverage through their employers represent the largest insured population in the country.  This group also saw an increase in health care spending of 44 percent from 2007 to 2016, according to data released last year.  Separate projections of employer costs point to a worsening of this trend over the next decade.  Experts warn that these costs will eventually impact economic growth.  They go on to point out that, as health care costs across the system continue to rise, some areas will feel the effects more than others, like for example, private insurance.  Hospitals get paid more from private insurance than they do from Medicare and Medicaid.  As a result, they charge private plans higher prices to make up the difference.  That shortfall will only be exacerbated in the coming years as more workers retire, transitioning off their employer-sponsored plans and into the Medicare program, creating further pressure on hospitals to make up that revenue through price increases on private coverage

Chronic Conditions:
The economic burden of treating chronic conditions in the U.S. – such as diabetes, arthritis, and heart disease – has reached “unparalleled” levels, according to a new analysis.  The direct costs associated with treatment of these conditions now stands at approximately $1.1 trillion.  Those expenses reflect the cost of hospital visits, pharmaceuticals, and medical devices.  However, when the indirect costs – namely, diminished productivity, early retirement, and premature mortality – are added to that figure, the total jumps to about $3.8 trillion – or, nearly one-fifth of overall GDP.  Worryingly, the aging of the population coupled with the rise in the prevalence of chronic conditions, puts these costs on a pace to double within 30 years.      

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