Medical Device Daily Washington Editor

Washington — Among the more popular sports in policy circles is the healthcare cost game, and the Congressional Budget Office (CBO) recently weighed in with an analysis of how these numbers might crunch out over the next 75 years.

The Baby Boom generation figures as an important factor in increasing costs, but extrapolating current trends in overall healthcare expenditures out into the future suggests that the rate of healthcare inflation – apart from aging demographics – is the primary culprit in the coming economic crisis facing healthcare, according to the CBO analysis.

The CBO document says that one approach to producing a less scary forecast is to anticipate that Americans may “ultimately demand changes to the system to prevent their consumption of other goods and services from declining.”

The numbers are pretty well known. According to CBO, U.S. expenditures for healthcare totaled almost $1.9 trillion in 2005, or about 14.9% of gross domestic product (GDP). A bit more than half (54.5%) were “financed privately, and the rest came from public sources.”

Private insurers accounted for most of the non-public payments for healthcare and accounted for roughly 37% of all healthcare expenditures (about $695 billion), and co-pays and other out-of-pocket payments took care of another 13% of total expenditures ($13.4 billion). On the public side of the ledger, Medicare edged out Medicaid, $342 billion to $311 billion, and the balance of other public spending came to a bit more than $194 billion for a total of public spending of about $847 billion.

The CBO report says that “although the aging of the population is frequently cited as a major factor contributing to the large projected increase in federal spending ... the main factor is excess cost growth,” hitting private healthcare as well. The agency estimates that “aging accounts for about one-quarter of the projected growth in Medicare and Medicaid spending” from now until 2030, with increasing age accounting for only 10% of overall healthcare costs increases by 2082.

The report projects that the percentage of GDP expended on healthcare may balloon to 31% by 2035 and to 49% by 2082, the last year in the 75-year forecast. The model assumes overall per-capita consumption would rise from $27,000 per person in 2007 to $42,000 in 2082, “but more than three-quarters of that extra money would be spent on healthcare,” leaving just 12% more for other consumption.

The CBO analysis says that comparative effectiveness studies could reduce the growth of healthcare spending, but that in some instances, “a key issue is determining which specific types [of patients] would benefit” from a specific treatment. This suggests that, as the clich states, “further studies are indicated.”

CBO also points out that in order for the Centers for Medicare & Medicaid Services to require doctors and other providers to make use of the data from comparative effectiveness studies, Congress would have to rewrite existing statutes. Should Congress do so, “Medicare could tie its payment to providers to the cost of the most effective or most efficient treatment,” leaving it to insurers, providers and patients to hash out how any difference in cost will be paid.

Disease management is also discussed briefly, but CBO says that while “25% of Medicare beneficiaries accounted for 85% of the program’s cost in 2001,” data from several concluded and ongoing demonstration projects suggest that “disease management and care coordination may raise the quality of healthcare, but do not significantly reduce costs among a broad array of patients.”

The conclusion: “[F]or now, the possibility and scope of savings remain unclear.”

‘Nano’ initiative updates plan

The National Nanotechnology Initiative (NNI), a multi-agency federal effort to boost nanotech development, recently published an update to its 2004 strategic plan, with primary emphasis on healthcare and, specifically, diagnostics.

“A number of advances will be required” to facilitate rapid and accurate diagnoses, including ... diagnostics with greater sensitivity, according to the plan, and the ability to measure multiple indices simultaneously.

As an example, the document cites the bio-barcode assay, saying that such an assay made of gold nanoparticles might be used “to amplify and detect amyloid beta-derived diffusible ligands, a molecular signature for early-stage Alzheimer’s disease,” and deemed “a million times more sensitive” than the current state of the art. And gold nanoparticles could be deployed along with imaging modalities to boost their diagnostic capabilities.

Nanobiotechnology is also an area of focus in the plan, with NNI’s interest in this area based partly on naturally occurring nanoscale organisms, such as diatoms, already being used to manufacture “a range of ceramic nanomaterials with new properties.” The document notes that some bacteria and viruses can also be engineered so as to detect disease states, and that some bacteria that “naturally produce nanoparticles [have been] engineered to produce nanoparticles coated with specific proteins” that can detect pathogens and/or their byproducts.

NNI states that “uncertainty surrounding some future applications ... could hamper development of nanotechnology.” Thus, scientists and policymakers will have to anticipate how such discoveries could impact society. With the help of “modeling tools, such as scenario analysis and multi-agent modeling,” policymakers will be able to reduce and manage any unintended consequences.

Finally, standards of measurement of nanoscale materials are needed, and some of these measurement tools may be specific to an area of interest or an industry. “Creating a suite of standards will require a coordinated interagency effort,” the document says, and that “regulatory agencies will have an essential role in describing the use of these standards.”

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