Healthcare –
The health care sector in the United States (U.S.) consumes approximately 17 percent of GDP, comprises 42 percent of mandatory Federal spending, drives deficit spending, and touches every aspect of American life, including military readiness. The Department of Defense (DoD) Unified Medical Program (UMP) – the consolidated budget for the Military Health System (MHS) – consumes more than eight percent of total DoD outlays. Absent significant change, increased DoD health spending will begin to crowd out readiness and modernization efforts. Similarly, U.S. mandatory spending, driven by the aging population and rising health care costs, will begin to crowd out discretionary spending by 2029. Compounding this grim financial picture, American health care is the world’s most expensive, but far from the world’s best in terms of access to primary care, prevention, coordination of services, and core measures such as morbidity and mortality.
Overall health system performance in the United States does not compare well with that in other wealthy nations, particularly given high U.S. spending...The health care spending gap with other countries appears to be driven by the high prices the U.S. pays for health care services — particularly doctors, pharmaceuticals, and administration.
This cost-based failure of the health care system is further exacerbated by, and in turn exacerbates, health care inequity and inequality in the U.S. Cost restricts access, ensuring that vulnerable populations not only fail to receive care when ill or injured, but also fail to obtain adequate preventive and primary care. Equally problematic is our nation’s reactionary response to; individual and global health crises – about 70 to 80 percent of health care spending is on preventable conditions – which is not leading to quality outcomes. Current challenges in the health care sector are not new, and do not hinge solely on rising costs, quality, or the availability of care; rather they arise from the interconnectedness and misalignment of all three. As renowned Harvard Business School professors Robert Kaplan and Michael Porter state:
Efforts to reform health care have been hobbled by lack of clarity about the goal, or even by the pursuit of the wrong goal. Narrow goals such as improving access
to care, containing costs, and boosting profits have been a distraction. Access to poor care is not the objective, nor is reducing cost at the expense of quality… the overarching goal for providers, as well as for every other stakeholder, must be
improving value for patients, where value is defined as the health outcomes achieved that matter to patients relative to the cost of achieving those outcomes.
This observation is equally true for the collective as it is for the individual.
The future health of the nation, and by extension its economic and national security, depend on the realignment of access, quality, cost, and the realization that long-term military readiness is dependent on a healthy population. On the basis of this Industry Study’s analysis, we provide a series of recommendations for both Government and private sector entities to transform U.S. health care, making it more sustainable overall, and more conducive to national security requirements.
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