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Saving money on medical costs
Date:5/6/2013

into account, those estimates come with a fatal flaw an assumption that costs have slowed largely due to the 2007 recession.

By comparison, Cutler and Sahni's study suggests that just over a third, about 37 percent, of the decrease could be chalked up to the recession. Instead, they say, the bulk of the decline could be attributed to factors like a decline in the development of new treatments.

"For whatever reason, the technology that's available for treating people seems to be improving at a slower rate than in the past," Cutler said. "In recent years, there have been a number of oncology drugs that have been touted as potential blockbusters, but most haven't sold as well as expected. Other analysts have also noted that while research and development spending by pharmaceutical companies has increased dramatically, the number of new drug approvals has remained flat."

With the passage of the Affordable Care Act, Cutler said, health care providers received new incentives to increase efficiency and reduce costly problems, such as readmitting patients soon after discharge and in-hospital infections.

"There are a variety of different programs where we've said if you're efficient you'll be rewarded, and so that's what a lot of institutions are trying to do," he said.

Steep out-of-pocket costs have also resulted in many people even those who are insured choosing to defer some treatments in the interest of saving money.

"A typical insurance policy now has a deductible of over $1,000 for an individual, and maybe $2,000 for a family, and most people don't have that amount of cash in the bank," Cutler said. "It's a big hurdle. People look at their cost-sharing, and they say this is a lot of money, I'm not sure I can afford it, so they're cutting back on discretionary imaging, they're cutting back on elective surgeries, and on referrals to specialists that might not be covered.

"At the same time, insurers
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Contact: Peter Reuell
preuell@fas.harvard.edu
617-496-8070
Harvard University
Source:Eurekalert

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