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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join editors from Health Affairs, the leading journal of health policy research, and special guests as they discuss this week’s most pressing health policy news. All in 15 minutes or less.
Hello, and welcome to Health Affairs This Week. I'm your host, Jeff Beyers. We are recording on 10/27/2025. Welcome to today's very spooky edition of Health Affairs This Week. Producer Shannon can clip in a Wilhelm scream here if need be.
Jeff Byers:In case you missed it, last week, we released our third insider trend report. It was on the influence of private equity in health care, and it's exclusive to HealthFairs Insiders. Memberships include access to our past reports and virtual events, including next week's events with KFF's Matthew Ray on health benefits 2025 insights from the KFF employer health benefits survey. Today on the pod, we have Ali Oakes, chief research officer at Trillion Health on the program. Trillion recently released its yearly report, and it highlights six forces shaping the health economy.
Jeff Byers:We have Ali on to talk about that report. Ali, welcome to the program.
Allison Oakes:Hi, Jeff. Thanks so much for having me.
Jeff Byers:Yeah. So can you briefly explain the setup of the report? One of the the statements that caught my eye were the laws of economics necessitate change in the health economy, and The US cannot afford its health care system.
Allison Oakes:Yeah. Absolutely. So we're always excited to put out our annual trends report. We've released this one just a little earlier this month. As we've been tracking these trends over the last five years, and as I've sort of been in the health services research space for the last decade, increasingly we think the trends that we're seeing are pointing to the need for systemic change.
Allison Oakes:It really just feels like something's got to give. So our sort of overall conclusion this year is that the health economy is at a crossroads. And the question is, will there be market discipline? Will we reform things from within? Will we unleash competition like every other industry and actually follow the laws of economics, specifically the laws of supply, demand and yield, or instead, will there be outside structural reform sort of forced on the health economy by outside stakeholders?
Allison Oakes:So most likely the federal government or state based governments.
Jeff Byers:So just to jump in real quick, what when you say The US cannot afford its health care system, what what are you saying there?
Allison Oakes:So in The United States, we spend about 18% of our GDP on health care, but we just don't get commensurate outcomes with the sort of money that we're pouring into it. And this is something that you guys are talking about all the time at health affairs, but we have a major value issue. And we think there are a few things, specifically the health plan price transparency data that started to be released in 2022, which start to change the equation and dictate or mandate the fact that we have to start changing things, and we need to start bringing down the amount of money we spend given the sort of health outcomes that we get.
Jeff Byers:So we can't get into the full report, but we'll touch on some aspects of it. The report has very six broad trends, currently going on in the health care space. You know, we will encourage readers to check out the report itself, provide a link in the show notes. But can you briefly explain the first trend, which is price sensitivity affordability concerns are shaping demand?
Allison Oakes:Prices just keep going up, but our health outcomes are either stagnant or in a lot of ways getting worse. And a big part of the issue is price. It's not really utilization. We have a price problem in The United States. So between 2010 and 2024, we see that annual health insurance premiums have increased by 86% and average deductibles have increased by more than 50% during that period of time.
Allison Oakes:Patients are spending more on premiums and have higher out of pocket costs, but health outcomes in The US continue to lag behind other peer nations. And in some cases, they're even getting worse, especially related to issues like chronic conditions. We know people are price sensitive. Unfortunately, if healthcare prices keep going up, they might avoid or delay high value care. Another major issue we see in this space, thanks to the release of this health plan price transparency data is just unwarranted and sort of inexplicable variation in commercial prices.
Allison Oakes:So just across four DRGs, we found that negotiated rates vary by more than 8X across the country. And further, these rates are not associated with quality. So in most industries, if you spend more money, you can expect to get a higher value product. That doesn't happen in health care, and we think that's a really obvious thing that needs to change.
Jeff Byers:A fair amount in the report we cover in health affairs, such as info on spending and costs. So we won't dive into those bits as much, but the second trend highlights, stakeholders are slow to adapt to changing demographic and lifestyle changes. So I thought that trend was interesting. Can you explain that?
Allison Oakes:So something that we outlined in the introduction is that medical care sort of in the traditional sense, ultimately only influences something like 20% of health outcomes. The things we really care about, like length of stay and quality of life. So while we do want to be able to provide the best possible medical care and clinical care in The United States As an industry, we also really need to understand and react to changing population demographics and also sort of behavioral or lifestyle trends that we see in this country. So like you said, one of the big things we unpack in this trend is the extent to which Americans live shorter lives and spend more years in poor health than a lot of our peer nations. Specifically, we see that in The US, this is data from 2021, but the average American spends about twelve and a half years in poor health.
Allison Oakes:We think we should be able to do a lot better than that. Related to that, two residents of other OECD countries live four to eight years longer, again, with more of those years being in good health. So there's just this obvious issue where we're putting a lot of money into the system, but not getting that much out of it. Some other important signals that we see, unfortunately, disease mortality is growing in The United States, especially in our younger eighteen to forty four year old population. So that's things like chronic liver disease, lower respiratory disease, and diabetes.
Allison Oakes:Again, not good signals related to overall population health. And another thing we talk about related to that commercially insured population who in a lot of ways is really the lifeblood of our system, they are increasingly representing a stagnant or sort of shrinking share of the pie, which has major revenue implications for providers across the country. So two things we highlight, the number of births is failing to offset those aging into Medicare, something that we need to grapple with. Additionally, we're seeing labor and delivery closures across the country at different hospitals. In some ways, maybe this is a good thing.
Allison Oakes:In this country, we sort of have this approach where hospitals are supposed to be everything to everyone. Maybe this is sort of a strategy where different hospitals are figuring out what they're best at and choosing to sort of approach a focus factory approach, like what Regina Hirslinger talked about a couple of decades ago. But there's also potentially an access issue that we need to be concerned about related to that. And then finally, something we talk about in this trend is the fact that population growth and disease incidents are two important things that influence how healthcare demand is going to change in a given market. So something we're always talking about with our health system partners is using data driven strategies to understand what service lines are likely to increase or decrease in the different markets that they operate in.
Jeff Byers:So we had Troy Brennan on recently to discuss his new book about primary care access, utilization and quality, which I think lays out this trend as well, which is your third trend of healthcare delivery system incentivized specialty care intervention instead of primary care. So one thing that struck me in your report is how patient trends were moving out of hospitals and a focus on pharma interventions as chronic care management versus like primary care and or surgical interventions. So how might this influence the health service landscape in the long term?
Allison Oakes:In The US patients have access to fewer primary care physicians and less utilization of primary care than in other peer countries. We have one of the smallest primary care workforces in the OECD with only 12% of physicians practicing primary care compared to 25 to 50% in those peer countries. And why is this? Unfortunately, the crux of it, we think that on some level you get what you pay for. And unfortunately, in The US, we just don't really incentivize primary care.
Allison Oakes:And if we want to start changing what our health outcomes look like in this country, we think that's something that probably needs to change. So related to the question that you asked, we do see the sort of migration of care outside of hospitals, you know, and providing care in the inpatient setting, which we get into a lot more specifically in trend five, but a few other signals related to the sort of missing on the fundamentals concept. We
Jeff Byers:haven't gotten to trend five.
Allison Oakes:Not even there yet.
Jeff Byers:We do talk about it
Allison Oakes:in trend three. So right, stay tuned. But related to what you were talking about with chronic condition mortality, we also see the sort of constellation of what we call emerging chronic conditions increasing, which seems to signal the sort of general unwellness in our country. So these are sort of newer conditions, not your traditional chronic conditions like type two diabetes, but things like POTS, sleep apnea, thyroid dysfunction, PCOS, migraines, chronic fatigue, and a lot of this again in your working age population. So just signals that we're not really investing enough in and getting out of primary care what we need.
Allison Oakes:We also missed the mark on sort of low cost, high value interventions. So we see that nearly half of all cancer diagnoses occur at a late stage. And even among screenable cancers, sixty five percent of colon cancers and fifty eight percent of cervical cancers are diagnosed at a late stage. So again, screening is one of those basic primary care things where we know it's a low cost but high value intervention. And so as you were talking about with the sort of pharma side of things, rather than prioritizing intervention, we tend to have a system that's reactive and focuses on treatment.
Allison Oakes:So we find a high polypharmacy rate, which underscores this idea of a pharma reliance in this country. So among patients 65, we found that fifty three percent of patients were taking at least five medications a year across five different classes. And even in the eighteen to forty four year old population, twenty three percent of patients met that criteria. So as we get into more in trend five and that migration to outpatient care in non hospital settings, there's this sort of question of, is the traditional procedure based approach to medicine going to stick around or might there be the shift to more pharmaceutical based intervention?
Jeff Byers:Yeah, it's hard to tell, especially with interactions from the government as they are in the pharmaceutical space.
Allison Oakes:Mhmm. Mhmm.
Jeff Byers:So the fourth trend, you state that, you know, there's a speaking of the government, and there's a the fourth trend states fraud and waste and abuse are pervasive in US health care. So you see that a lot in the news these days. But I had one specific slide I wanted to ask you about, which was on more urban hospitals are claiming rural status. Can you explain that? That was an interesting talking point to me.
Jeff Byers:So like, what does that mean?
Allison Oakes:Yeah, absolutely. So to your point, there is a well established value issue in The United States. It's hard to know exactly how much of our spending is wasteful, but I think everybody can agree it's a sort of indisputable issue. So to your specific question about more urban hospitals claiming rural status, this particular slide is actually based on great work by old colleagues out of Hopkins. They find that the share of hospital beds being classified as administratively rural grew from 13% to 45% between 2013 and 2023.
Allison Oakes:And that this sort of shift is driven by the dual classification of many urban hospitals. So on its face, it just doesn't make a lot of sense. While technically following the rules, it's an obvious example of double dipping. And this expansion ultimately allows for large metropolitan facilities to access rural focused subsidies and programs like 340B because when they're able to get that rural status, there's lower thresholds to enrolling in certain programs and subsidies. So this is just an example of a rule exists, but there are also loopholes related to it.
Allison Oakes:And we think that if we can figure out more of these loopholes and sort of clamp down on them, it would potentially reduce some inefficiencies and some waste in our system, which ultimately could improve overall value?
Jeff Byers:So we teased it up for the audience a little bit. We got to that we're at that fifth trend now. We touched on this a little bit with the third trend, so which is drum roll please, transition to alternative care settings and therapies is accelerating. Overall, like what are you seeing?
Allison Oakes:Yeah, so something conceptually beyond PAC is this idea that the cycle of innovation influence rates of care migration outside of the hospital. So the idea is that as new procedures become more established, they're able to move from the hospital setting to less intensive and expensive outpatient settings. At the same time, new procedures and technologies emerge which sort of replace or replenish that lost inpatient care. However, sort of increasingly, we think there's this question of, well, is all that lost inpatient care really going to be replaced or is there going to be an overall reduction in inpatient utilization? And we think there are emerging signals that suggest the latter.
Allison Oakes:So just an example of that, the inpatient only list is a hot topic between the last three administrations. The first Trump administration proposed to remove it, It was reinstated by the Biden administration. And now again, the IPO list is sort of on the chopping block. And the IPO list is a list of procedures where in order for Medicare to reimburse those services, they have to be provided in the inpatient setting. So this is sort of an example where past is prologue.
Allison Oakes:Just one example, since knee replacements were removed from the list in 2018, the volume of inpatient knee replacements has decreased by eighty five percent. So that sort of migration from inpatient to outpatient care has a very real impact on hospital revenue. And all hospitals at this point really need to be developing an outpatient strategy, whether that's hospital outpatient departments or ASCs in order to stay relevant and stay in the game. As we talked about a little bit before too, surgical procedures are likely imperiled by novel drugs. So just playing that out a little bit further between 2018 and 2023, we see that GLP-one patient volume exploded by more than seven hundred percent while bariatric surgery volume has been flat to declining.
Allison Oakes:So again, this just sort of calls into question whether the typical procedure based approach to medicine is potentially changing.
Jeff Byers:Okay, well, for taking us on this whistle stops tour of your latest report. The last trend is if the industry cannot deliver value for money and employers will not demand it, the government is prepared to force it. So what do you mean by that? I'll just leave it there.
Allison Oakes:Yeah. Like most simply, healthcare cannot continue to be an exception to the rule, and we have to figure out how to provide value for money. So why do we think we're at a crossroads now? We think the health plan price transparency data is a big part of why all of this starts to change. So most simply, people are dissatisfied with The US healthcare system.
Allison Oakes:54% of people say the system is in a state of crisis and 25% say it has major problems. While all this has been going on, the sort of primary employer strategy to contain healthcare costs has been to increase premiums and sort of dump more cost shifting onto employees or patients. And unfortunately sort of outsized lobbying has also reinforced this status quo. But with the health plan price transparency data, we can now actually see what every single provider is reimbursed by every single payer for every single sort of procedure. And once you start to understand that data and the variation that exists in those negotiated rates, it just calls into question which providers and sort of which stakeholders within the health economy are actually able to provide value to the market.
Allison Oakes:The other thing is sort of the availability of that data implicates the fiduciary duty of employers to be providing high value benefits to their employees. And taking a step back, historically, we've seen that most government interventions haven't actually contained healthcare spending. So despite CMMI's best efforts, or sort of experiment with alternative payment models from 2012 to 2025 is unfortunately set to generate more than $5,000,000,000 in losses. So that really calls into question this focus on value based care. And we think we need to get to this concept of value for money.
Allison Oakes:And we either need to do that from within by leveraging this price transparency data and figuring out how to compete and ensuring that every sort of stakeholder is actually providing value to the market or taking a step back based on the 2022 CBO report, we think that price caps are imminent. Actually just in the last year in the state of Indiana, which is a Republican controlled assembly, they passed a new law which will ultimately implement commercial price caps. So in sum, putting all these pieces together, we think the question is, do we figure this out as an industry and figure out how to sort of align with those economic laws of supply, demand and yield? Or will that structural reform come from the outside and more or less happen to us?
Jeff Byers:Well, no short order and, you know, lots of good information in the Trillion report for people interested in various aspects of healthcare spending and trends. Allie Oakes, anything else you wanna highlight quickly of what you got going on at Trillion before we wrap up?
Allison Oakes:What we've got going on at Trillion? Well, the one fun thing that we put out recently, it's called Oryah. It's a free AI chatbot that people can use to be using natural language to access information on hospital prices, leveraging the hospital price transparency data. As most folks probably know, the hospital price transparency data is something that hospitals are mandated to release and is free to the public. That said, just because data is available doesn't mean it's very usable.
Allison Oakes:So we sort of took it upon ourselves to get that into a chat bot where people can just use regular words to ask it, Hey, within Massachusetts, if I need a knee replacement and I have this health insurance plan, what's the least expensive place to go? So again, we think this price transparency data is the thing that starts to really create change. And we just hope to get the word out there and get more data into the hands of the people.
Jeff Byers:Well, great. Yeah. And to the listener, again, we'll put a link in the show notes to the report. Allie Oakes, thank you for joining us today on Health Fairs This Week. And if you, the listener, enjoyed this episode, send it to the changeling in your life.
Jeff Byers:And with that, we'll see you next week. Bye.