Disease Management Has Moderated U.S. Health Care Cost Inflation

Thanks to years of unapologetically quoting, citing, linking and blogging in over 1300 posts that disease management saves money, the Disease Management Care Blog has earned approbation, fear, respect and disdain nationwide.

But its audacity is mere child's play compared to this Wall Street Journal Opinion by J.D. Kleinke.

His claim? That "disease management" was one factor in the slowing of national health care costs.

Mr. Kleinke, as you can see here, is no lightweight. He not only has experience as a real-world health care entrepreneur and executive, he's the author of the groundbreaking book, The Bleeding Edge.  When he published it ten years ago, Mr. Kleinke predicted the rise of "Emerging Healthcare Organizations" (EHOs) that would harness the forces of risk-assumption, consumerism, consolidation, integration, and industrialization and transform the health care system. If you believe ACOs will succeed, you may want to thank JD for thinking of them first - even if he got two of the initials wrong.

But is he wrong about disease management?

Mr. Kleinke uses a copyrighted bar graph in the article but the image below (lifted by the DMCB from the White House's web site) shows the same data. After an uptick in 2000, the nation's annual percentage change in total health care spending has progressively declined and is the lowest it's been since the 1980s.

Mr. Kleinke asserts that when HMOs were defanged after their '90's decade of bad behavior, insurers not only rolled out deductibles, co-payments, health savings accounts, tiered drug plans and urgent care center coverage, but they were subjected to public performance measures and started "the still emerging science of disease management." The result was an historical decrease in cost inflation.

He makes the point that it's impossible to know the relative contribution of each of the initiatives described above. Assuming that they collectively had some impact, Mr. Kleinke calls for a doubling down and change the regulations and tax code that still is preventing insurers from building on their success and finding other ways to innovate.

The DMCB agrees that he makes a good point. But it also brings up several caveats:

Just because two things happen at the same time doesn't mean one causes the other.  That being said, Mr. Kleinke's hypothesis is intriguing.

Depending on how you compare Medicare fee-for-service (FFS) (where there is no disease management) and commercial insurance costs (where there is), the rate of increase Medicare may be even lower.  It's comparing apples and oranges, but it's still an important point that deserves further analysis.  There's more discussion on why the comparison is not so simple here.

The remarkable drop in health care costs over the last two years may be result of a bad economy and not the advances described by Mr. Kleinke.  We'll find out more when the economy picks up steam.

Last but not least, a smaller rate increase on top of an ever expanding fraction of the economy is still an big increase.  We're now committing a whopping 17% of gross domestic product to health care.