A new report from Deloitte predicts that although health care spending will continue to grow in the U.S. in coming years, the growth will be less than some experts have predicted, due to changes in consumer choices and options.
The report, “Breaking the Cost Curve,” predicts that three things—new business models, emerging technology, and more consumer engagement, will act to slow health care spending growth over the next two decades.
The combination of those three elements will result in a $3.5 trillion “well-being dividend” by 2040, according to Deloitte actuaries.
The report noted that health care spending recently topped $3.8 trillion (in 2019) which is nearly 18% of the nation’s gross domestic product (GDP). The Centers for Medicare and Medicaid Services (CMS) projected at that time that health care spending would continue to grow at a rate of 5.3% per year. By 2040, CMS estimated health care spending could reach $11.8 trillion annually.
Deloitte’s prediction, however, is that the upward trend will moderate, due to the changes in technologies, treatments, and consumer engagement. They summarize the future of health care by outlining three future realties:
The well-being dividend
The Deloitte report predicts a “well-being dividend” that will result from a combination of “new tools, systems, or protocols to help consumers to take an active role in their health and well-being.”
Although the success of treating health care as a consumer product has been mixed at best, there certainly has been a movement toward use of personal devices, online care, and other health technology innovations that have consumer appeal.
The Deloitte report goes on to define well-being as a whole-person approach to health, which includes not only physical health but mental health, as well as “spiritual, social, emotional, equitable, and even financial health.”
“Achieving and maintaining a state of well-being might encompass everything from a healthy diet and exercise, to addressing drivers of health and inequity, to using cell and gene therapy, and other advanced therapies, to prevent, treat, or cure today’s illnesses,” the report said.
Redirecting health care spending
The study noted that by some measures, as much as 25% of health care spending in the U.S. is wasted. Duplicative care, administration, unnecessary treatments, high drug prices, and hospital readmissions are listed as common examples of wasteful spending. The report estimated that if waste were cut out of the equation, health spending in the U.S. would account for 13.9% of GDP, rather than the current 18.4%. The report said nearly a trillion dollars a year ($935 billion) is wasted in health care spending.
The report went on to say that the country is on track for an “unstoppable transformation” in how health care is accessed and provided. “This future will likely be driven by new business models, scientific and technological breakthroughs, consumers armed with highly personalized data, and regulations that encourage change,” the report said.
Some of those changes will include a new emphasis on preventive care and healthy lifestyles, the report said, as well as addressing social determinants of care such as housing, access to food, and community resources.
“Our models show that spending in these well–being–focused areas will eclipse treatment-related expenses by 2033. By 2040, we expect spending on well-being to account for nearly two-thirds of the total health spending—or 11.3% of the GDP—and spending on treatments and diagnostics to make up the rest (7.1% of GDP), the report said.
New models for the health care economy
The Deloitte report predicts some rather significant changes in business models in health care, based largely on technological advancements and changes in consumer habits.
One prediction is the end of the general hospital model—the Deloitte report predicts that many things like heart attacks that require hospitalization will become less common as preventive care and in-home care options become more common. “Patients who do need care will likely receive it in highly specialized settings that are tailored to service a specific need rather than being a ‘one-stop’ for all disease states and specialties,” the report said.
The report also predicts more personalized care, which it said will reduce the use of mass-produced therapies, and cause biopharma companies to focus on individualized therapies instead.
Health care financing will also change, the Deloitte analysts predict, mirroring the change in care models. As care becomes more personalized, consumers will seek benefit products that are tailored to their needs and lifestyles.
“Business models that focus on well-being and care delivery, data and platforms, and care enablement, are already emerging. These new models are likely to proliferate quickly and would represent the bulk of health revenue in a future that rewards well-being and provides efficient and effective care when required,” the report said.