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Making Healthcare Affordable

Editor’s note: Information and knowledge are powerful tools. Treatment for unpredictable, catastrophic events accounts for only 31 percent of total US health care spending. Some 60+% of health care is a result of lifestyle choices. How will public policy address ad payers respond to this challenge will define whether health care will be ultimately affordable, or not.

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The fundamental nature of medical risk in the United States has changed over the past 20 to 30 years—shifting away from random, infrequent, and catastrophic events driven by accidents, genetic predisposition, or contagious disease and toward behavior- and lifestyle-induced chronic conditions. Treating them, and the serious medical events they commonly induce, now costs more than treating the more random, catastrophic events that health insurance was originally designed to cover (Exhibit 1). What’s more, the number of people afflicted by chronic conditions continues to grow at an alarming rate.1

As the nature of risk has evolved, neither the funding mechanisms nor the forms of reimbursement for health care have adapted adequately, so the system’s supply and demand sides are both hugely distorted. Consumers are overinsured against some risks and underinsured against others; woefully short of the savings required to pay predictable, controllable expenses; and all too likely to be dealing with doctors who have big incentives to treat individual episodes of care rather than prevent illness and manage chronic conditions effectively.

http://www.mckinseyquarterly.com/Health_Care/Strategy_Analysis/Why_understanding_medical_risk_is_key_to_US_health_reform_2381

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June 20, 2009 - Posted by | Affordability, Cost, Federal Government, Health care delivery | , ,

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