Bleak Forecast for Future of Health Care

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San Francisco Chronicle

As a turbulent decade in American medicine begins its final spin, crystal ball gazers are peering into the future of health care, and they are not finding a pretty picture.

In 2010, millions of Americans will still be living without health insurance, whether or not HMOs are able to tame health care inflation. Medicine will come in distinctly different flavors for rich and poor, and Americans of all backgrounds will have to dig deeper to pay for it.

This rather bleak assessment comes from the Institute for the Future in Menlo Park, a top national forecaster of health care trends that will offer its latest predictions at a conference today at the Oakland Marriott.

No matter how the tea leaves are read, the institute will report that the future of health care in America is fatefully intertwined with the prospects of managed care.

If, as in the rosiest scenario, HMOs fulfill their promise of efficient, market-driven medicine, only one in 10 Americans will lack health insurance by 2010, and the size of the nation’s medical bill will track the course of general inflation.

“It’s pathetic that, even in the best scenario, we will still have 30 million uninsured,” said Wendy Everett, the study’s lead author and director of the institute.

But if HMOs lose their grip on health care spending — succumbing to backlash from angry consumers and doctors alike — health spending a decade hence will consume 19 percent of the nation’s output, compared with 13.5 percent today, and one in five Americans will be without health insurance.

A third scenario, which envisions the next decade as maintaining the status quo, forecasts modest growth in health care costs and a nation with 47 million uninsured.

While laboratories continue to churn out breathtaking discoveries in molecular biology, the day-to-day business of finding a way to pay for modern medical miracles only gets more muddled.

“The American health care system is at once the most expensive and the most inadequate system in the developed world, and it is uniquely complicated,” wrote Dr. Marcia Angell, editor of the New England Journal of Medicine, in the first article of a gloomy new series on American health policy trends.

The Institute for the Future’s forecast sees no revival of political will to win universal health care for Americans. That notion was smothered with the demise of the Clinton administration’s Health Security Act in August 1994.

“Despite the rhetoric, we haven’t seen any significant innovation in social programs in this country since Medicare in the 1960s,” Everett said. “For all the talk of patient’s rights, I don’t think we’ll see anything significant through 2005.”

What she does see is a health care system whose tenuous grip on runaway costs rests in the hands of HMOs and other managed-care entities. Despite public disdain for the cost-conscious health plans, Everett predicts working people will flock to them. Employers are shifting health care costs to their employees, and employees will react by picking the lowest-cost alternatives.

“There will be 120 million people in HMOs by 2010,” Everett said. That’s about a 70 percent increase from the 70 million enrolled in HMOs today.

Like them or not, Everett credits HMOs with engineering an extraordinary slowdown of soaring health care costs during the the past five years. Since the 1960s, the average annual growth in health care spending was 11 percent. In the past five years, the average growth rate was 6.75 percent.

Accordingly, the institute’s different scenarios for health care inflation and the number of uninsured are tied to the ability of managed care to continue its work.

Even critics of HMOs acknowledge that managed care has played a key role in containing health care costs, but they question the price consumers have had to pay in terms of quality of care.

“It would be tremendously foolhardy to rely on for-profit managed care to save us,” said Jamie Court, of Consumers for Quality Care.

“We’re not trying to block management of care,” said Court, whose Santa Monica group has sponsored an array of legislation intended to rein in the power of health plans. “We’re trying to create it. The system today has never managed care. It just manages costs.”

Everett’s worst-case scenario, which forecasts 65 million uninsured Americans by 2010, assumes that managed care buckles under pressure from angry consumers and doctors and from its own internal greed. Instead of effectively maintaining cost and quality, the HMOs resort to hassling doctors and offering coverage only to the healthiest consumers. Backlash prompts restrictions that hamstring cost-control techniques. Employers drop insurance coverage rather than pay higher premiums.

A more optimistic scenario foresees a continuation of consolidation in the health care industry, leading to more efficient hospitals and doctor organizations. Among the premises: Younger physicians enter the market with lower income expectations and more of an employee mentality than their predecessors.

The shift to electronic medical records goes smoothly, and the development of new medical technologies is steered toward those that reduce costs as well as save lives.

Everett is not optimistic that American society can control its craving for costly new medical technologies. But current trends are not sustainable. “We can’t continue to demand more and refuse to pay for it,” she said.



HMOs will play an increasing role in containing health care costs in the future. Following are some present and future health-care spending trends.


— 70 million people are enrolled in HMOs today.

— In the past five years, HMOs have slowed the average annual growth rate in health care costs to 6.75%, down from 11% annually since the 1960s.

— Spending on health care (HMO and non-HMO) consumes 13.5% of the nation’s output.


— 120 million people will be enrolled in HMOs by 2010, a 71% increase from today.

— From 30 million to 65 million Americans will lack health insurance.

— Spending on health care (HMO and non-HMO) will consume 19% of the nation’s output.

Source: Institute for the Future

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