Report Finds the Money Spent on Healthcare Doesn’t Provide Value

Are we as a society really getting the most value for our healthcare dollars? That was the question that Sanjula Jain wanted to answer. As senior vice president of market strategy and chief research officer at Trilliant Health, Jain wanted to look at the macroeconomic trends to assess whether consumers and payers are getting value from the dollars spent for healthcare in America.

What Jain and her colleagues found and documented in their recent report is that increasing utilization of healthcare services and the increasing amounts of money spent haven’t increased health, quality of life or life expectancy.

Sanjula Jain

“There's a lot of indications that outcomes are getting worse,” Jain said in an interview. “We’re spending more money. Mortality is up. We’re not seeing a lot of compliance to value-based programs. Providers are having to spend millions of dollars just to do quality reporting, and what do we have to show for it?”

National health expenditures increased from $2.8 trillion in 2012 to $4.5 trillion in 2022. But there has been relatively little change in demand or utilization for healthcare services. In fact, according to the many macroeconomic measures that Trilliant Health assessed, the U.S. healthcare doesn’t appear leading to healthier Americans. Consider:

• The health status of Americans is deteriorating. Data suggest that the number of Americans with chronic conditions will increase from 137.3 million in 2020 to 221.1 million in 2050.
• Although the overall cancer incidence rate is decreasing, the incidence of melanomas, uterine and pancreatic cancers is growing since 1999. The breast cancer incidence rate has remained stable since 1999.
• Cancers among people younger than 45 years of age are growing, especially breast, colon, kidney and uterine cancers, which are up since 2018.
• Although life expectancy has increased over the last century, healthy life expectancy remained relatively flat from 2000 to 2019, with a decline in 2021 during the COVID-19 pandemic. Life expectancy in the United States is almost four years lower than in countries such as Australia, Canada, France, Japan, Sweden and Switzerland.
• U.S. infant and maternal mortality rates also above those of other countries. Mortality from chronic liver disease for those between the ages of 18 to 44 years is growing.

Additionally, Trilliant Health’s data suggests that healthcare utilization patterns indicate further declines:

• Healthcare spending is projected to grow to $7.7 trillion by 2032.
• Primary care volume was down in 2022 and 2023 after a 2021 increase. Demand for behavioral health increased during the same time among a shortage of providers. Demand for behavioral health continues to trend higher.
• Americans have higher rates of obesity and diabetes and more behavioral health conditions than ever before. Healthcare for children increased from 2022 to 2023 in the areas of eye, ear, nervous system and respiratory.
• The value of technology innovation is uncertain: telehealth’s value is limited, patients remain uncomfortable with the use of AI in healthcare, biosimilar market share is low
• After a decline, uninsured rates are predicted to reach 8.9% by 2034, with affordability being the top reason.

Value-based care, however, is not the same as getting value for money, Jain said. “Value-based care doesn’t move the needle on spending,” she said. “Value-based payments reallocate payments within the existing pool, which is different from value for money, which is about finding a way to shrink the pool. Value for money is focused on shrinking costs versus how to slice and dice an allocated amount among different physicians and providers.”

Stakeholders have defined value differently. Many of have focused on “outcomes” or “cost-effectiveness.”

Jain said outcomes measures and cost-effectiveness have their place, but these measures are focused on specific interventions or programs. “In healthcare, we’ve had tunnel vision,” she said. “Everybody’s focused on their individual initiatives and providing that in a way that is effective. But how does that fit in the broader system? What’s the impact downstream on what the patient does, what it costs and how does it fit into the broader system? At the health economy level, when you roll up the impact of all of these various things, the net value isn’t there.”

Jain said she hopes the larger view of healthcare will lead to changes that truly assess value in healthcare. Transparency initiatives, she said, are a positive step forward in enabling that assessment.

“Employer are frustrated right now because they’re not seeing the ROI for the amount of money they’re putting into their health benefit plans,” she said. “Now that prices are beginning to be exposed, there’s a lot of opportunities to steer employees to the higher-value providers.”

Although Jain and her colleagues said that all healthcare stakeholders can deliver more value for money, it is employers who are best positioned to demand that value.

Employers have been passive, but that is unlikely to continue as employers now face lawsuits for noncompliance with the Consolidated Appropriations Act of 2021, which amended the Employee Retirement Income Security Act (ERISA) to require greater transparency around prescription drug and healthcare spending.

These changes to ERISA have led to lawsuits for breach of fiduciary duty. Earlier this year, for example, a class action suit was filed against Johnson & Johnson for mismanaging prescription drug benefits. The suit alleges that this has led to higher premiums, higher deductibles, and higher coinsurance and copays.

The lawsuit claims that J&J’s PBM Express Scripts has shown a pattern of unreasonable mark ups on prescription drugs. “No prudent fiduciary would agree to make its plan, and beneficiaries pay a price that is two-hundred-and-fifty times higher than the price available to any individual who just walks into a pharmacy and pays out-of-pocket,” the suit said.

In July 2024, a similar lawsuit was filed against Wells Fargo for breaching its fiduciary duty for the mismanagement of prescription drug benefits, which also used Express Scripts as its PBM.

“Employers are starting to see that their middlemen, the brokers, have been steering them astray,” Jain said. “What’s different now is employers have fiduciary duty to be fiscally responsible about these dollars now. And now that information if becoming available, they can’t sit back.”