The health care payment environment: past, present and future

Area of Science:

• Health Economics
• Healthcare Management
• Public Health Policy

Background:

• Between 1965 and 1982, hospital costs per admission experienced a significant inflationary trend, rising by approximately 690%. This rapid escalation in healthcare expenditures necessitated a re-evaluation of existing payment structures and cost-control strategies.
• The escalating hospital costs during this period placed considerable financial strain on payers, including government programs and private insurers, prompting the exploration of drastic measures to curb the rate of increase.

Purpose of the Study:

• To analyze the contributing factors behind the substantial rise in hospital costs per admission from 1965 to 1982.
• To review historical and contemporary actions implemented or proposed to control the rate of hospital cost inflation.
• To predict future shifts in payment systems for healthcare providers based on observed trends.

Main Methods:

• Analysis of historical healthcare financial data to identify trends in hospital costs per admission.
• Review of policy documents, legislative actions, and academic literature concerning healthcare cost containment strategies.
• Comparative analysis of payment systems across different healthcare provider types.

Main Results:

• Identified key factors contributing to the 690% increase in hospital costs per admission between 1965 and 1982.
• Documented various interventions and policy proposals aimed at controlling healthcare cost inflation over the specified period.
• Observed significant shifts in payer strategies in response to rising hospital expenditures.

Conclusions:

• The inflationary trend in hospital costs necessitated significant interventions by payers.
• Past and proposed cost-control measures indicate a move towards more regulated payment systems.
• Future payment systems for physicians and nursing homes are likely to evolve similarly to hospital payment reforms.