As we inevitably do this time of year, we prognosticate about the new year. This time around, it’s a toughie: there are too many uncertainties that preclude us from doing a straight-line forecast for 2009, especially in health and health care.
Here are some trends and wild cards to keep in mind for 2009: the year of managing risks.
How will the macroeconomy play out against health care in the new year? Keep in mind the Kaiser Family Foundation’s metric on unemployment: an increase of 1% unemployment leads to 1.1 million uninsured, and 1 million more people added to Medicaid. This was the math that worked in 2007-8. The metric will probably change in 2009 as Governors struggle to balance budgets while providing medical services, education, and safe streets to citizens. The National Governors Association, and the individual state heads, have all warned that Governors will inevitably cut services in 2009 and into 2010 if tax receipts continue to decline.
Taxpayers will revolt. And not just the usual libertarian suspects, either. We’ve entered the era where even my kid is concerned about new taxes being levied on iTunes downloads in places like the District of Columbia, as well as Alabama, Arizona, Colorado, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Maine, New Jersey, New Mexico, South Dakota, Texas, Utah, and Washington. One analyst worth noting expects a "Tax Revolts for Dummies: How to Work the System" guide to appear, sooner rather than later. Revolt or not, though, people need to manage their health and health care during the economic downturn, and citizens will be looking for tools to do so and good value-based prices on health goods and services.
Policymakers and influentials have come to understand that health is integrated into the larger macroeconomy. It is a welcome sign that those who will be at the helm of the new economy on Team Obama recognize the intimate relationship between health and the American economy. Peter Orszag, just out of the Congressional Budget Office and soon to lead the Office of Management and Budget, has spoken publicly about health care costs and the GDP over the past eighteen months. His sober and smart observations give me comfort insofar as he will be playing a key role in reshaping the broken U.S. economy.
Hospitals’ credit woes will continue to constrain providers’ operations. Reports from all of the major credit rating agencies, including Standard & Poors, Fitch, Best and Moody’s, have all negatively opined about the state of hospital finance for 2009. Fitch and Moody’s downgraded the nonprofit hospital sector to negative. The American Hospital Association’s survey in November 2008 found that 1 in 2 hospitals was considering or actually postponing capital expenditures. This would include renovations, increasing capacity, and other capital programs. The cost of borrowing money has made it nigh impossible to find hospital financing for improvements.
Health technology will be hit in two ways in 2009. Obviously, credit access problems will hinder many hospital projects from going forward on-time. This will slow sales among med tech firms — already-long sales cycles will further lengthen, and some planned projects will be postponed or cut until the hospital microeconomy improves as part of the larger national economy. Furthermore, more formal evidence-based analysis will take hold among providers and payers, the latter of whom have been long assessing evidence for new medical technologies. Clinical effectiveness is becoming part of the larger analysis for spending scarce resources. There’s no better time than a recession to bring this concept into play on a mass scale.
Citizens will also assess health spending–but not always with a rational view toward health outcomes. Consumers’ tight household budgets have begun to negatively impact some peoples’ health behaviors, such as postponing necessary care and refraining from filling prescriptions. Manhattan Research found that 40 million Americans didn’t fill prescriptions due to cost constraints by the fourth quarter of 2008. This number could increase in 2009, leading to worsening health outcomes. In particular, scripts for mental health conditions weren’t filled as frequently as Rx’s for other types of conditions.
Consumers will continue to migrate on the path of personal health information adoption. There’s a first-cohort of pioneering citizens who’ve adopted fairly sophisticated self-care tools online at PatientsLikeMe and Organized Wisdom, for example. New citizen-cohorts will go online in 2009 to places like Zagat’s ratings with Blue Cross plans, and innumerable applications are already available for service and provider ratings. HealthGrades is expanding its excellent offerings in the ratings arena, too, and is one of the few consumer-facing HIT companies with a strong business model that’s forecasting revenue growth in 2009.
Citizens will be driven to seek health alternatives. Americans who don’t have access to health insurance are already well down the path of seeking alternatives to traditional health channels in the U.S. — hospitals, doctors, prescription drugs. If Americans who are insured — and especially those who are underinsured — don’t perceive their health plan or providers can respond to their needs, they’ll also look elsewhere.
I see 2009 as the watershed year kicking on the on-your-own health era for millions of Americans. Investors are already wincing about feeling on-their-own vis-a-vis their banks and 401(k) service providers. We’ve entered the same for health care with out-of-pockets and premiums reaching 40 percent sharing between insureds and employers providing health insurance. The umbrella for this is Whole Health, Integrative Health, Complementary Medicine, and other monikers. We’ll see a proliferation of services and online tools to help people help themselves and find support. A growing number of western-trained MDs have begun to learn integrative healing methods and we’ll begin to see the field move from anecdotal- to evidence-based care.
Jane’s Hot Points: As for me, I’m managing risks (financial and health) in a variety of ways. The investment portfolio will need even more cash infusions; the medical savings account will be carefully managed and efficiently utilized; I’ll work hard to perform excellently at work; and, instead of this being the year of "Me," it will be a year for "Mii." Chez Kahn was blessed with the Wii Fit under the tree. I’ve already experienced the sobering body-mass index exercise on the balance board and am on the journey to Wii Fit-ness.
It’s a healthy investment in this upcoming year for managing risks, uncertainties and out-of-our-control wild cards.