The story of the early 2012 in the U.S. from a macroeconomic perspective has been its strength—and with the news that consumer credit climbed $19.3 billion in December 2011, it would seem like demand is poised to grow likewise. That’s good news for most of the economy, but more interesting news for health care than anything else.
The inexorable march of inflation in health care costs was slowed by low demand—people didn’t make the appointments they were supposed to, or otherwise repressed demand they might otherwise have. If the economy is indeed stronger, and demand commensurately stronger, it would seem likely that demand for health care will increase and consequently its cost will be back on the old growth curve. That’s good insofar as Americans won’t put off that open-heart surgery they’ve always had their eye on, but bad insofar as everything will cost much more money.
I think this is the right way to read the news from UnitedHealth, that they intend to switch to a suspiciously ACO-like system. They are, of course, frightened about that demand coming back. (How often do you see a stock drop after recording a 21% growth in earnings, beating expectations? When you’re a health insurer who admits demand’s coming back.) What’s worth watching, as always, is the implementation. They apparently have 2% of their membership base enrolled…and expect to get to 70% by 2015.
By comparison, the government is starting up with 32 ACOs, and planning to finish with its pilot program for Medicare by 2015, at which point they will probably reevaluate. I suppose this is an example of what happens when that private sector ingenuity/efficiency/etc. gets a hold of an idea.
At any rate, the demand is coming, and we’ll see whether new ideas have enough strength to beat them back.
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