Is Southern Europe’s debt crisis an omen for US health care?
The Wall Street Journal (Pain for Europes Smaller Drug Firms) notes that Spain, Greece, and Italy are putting the squeeze on drugmakers as part of national austerity programs designed to ease the debt crisis. Companies like Almirall and Alapis that depend heavily on those markets are suffering mightily as national health systems cut reimbursements. Theres less appetite for cuts to hospitals and physicians, and none for taking away coverage.
The US fiscal situation isnt as pressing as Southern Europes. Still if present trends continue, well get there. In fact, uncontrolled health care spending mainly Medicare is the culprit. So what can we expect in a 10 year time frame, assuming the USs finances arent straightened out by then?
- Hospitals and physicians are likely to get hit harder in the US than Europe. Thats partly because physicians get paid more here than Europe and also because Medicare sets rates and pays providers directly
- Pharmaceutical companies wont escape the axe, but theyre a bit less vulnerable politically in the US because they are a major source of R&D spending, are seen as innovative and a more attuned to the political system
- The Affordable Care Act is intended to bring more people into coverage, but the effects may be partially offset by states tightening Medicaid eligibility and Medicare restricting entry by raising the eligibility age or increasing patient financial responsibility
- Although it sometimes seems spending cant go any higher, there still may be cost shifting from public programs to the private market, where premiums may grow even more rapidly than they would otherwise
Im hoping the Super Committee or subsequent efforts place us on a more sustainable policy footing and that PPACA, state-level and private initiatives succeed in decelerating health care spending. Otherwise things are going to get ugly.
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Tags: Debt, Debt Crisis