Health Affairs, 22, no. 6 (2003): 11 doi: 10.1377/hlthaff.22.6.11 © 2003 by Project HOPE	New Online   VP Candidates On Health Reform   Cutler On McCain's Plan   Scoring Obama's Plan   Roundtable: Politics, Reform   Number Of Uninsured   Delivery System Overhaul

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Supply & Demand

PROLOGUE

Supply And Demand: The Big Picture

To lead off, David Shactman and colleagues from Brandeis University’s Schneider Institute for Health Policy, along with Ken Thorpe of Emory University’s Rollins School of Public Health, analyze recent trends in hospital spending and capacity and conclude that "the era of excess hospital capacity appears to have ended." The downward trend in hospital spending growth reversed in the mid-1990s, the authors write; unlike other experts, these authors believe the accelerating hospital spending will not abate and that hospitals also might have to reverse course and add hundreds of thousands of beds in the next decade.

Next Uwe Reinhardt, of Princeton University’s Woodrow Wilson School of Public and International Affairs, cautions against panic as policymakers fear an immediate bankruptcy of social insurance programs with the approaching retirement of the baby-boom generation and boomers’ subsequent eligibility for Medicare. Although in 1999 Americans age sixty-five and older had health care costs three times as high as those in the 34–44 age cohort, the aging of the population "by itself is not likely to be a major driver of increases in the demand for health care and national health spending" because the process is too gradual, Reinhardt writes. A literature review shows that aging adds less than 1 percent per year to expenditure growth rates. The bigger drivers of health care spending, Reinhardt writes, are such forces as rising per capita incomes, technology, and workforce shortages, all of which increase per capita spending for other age groups as well as for aging Americans.

Finally, Gloria Bazzoli and colleagues at Virginia Commonwealth University, the Center for Studying Health System Change (HSC), and Mathematica Policy Research analyzed data from the HSC’s Community Tracking Study to see how local health care leaders view their own supply situation. The common themes were about emergency department use and overcrowding; capacity constraints in other hospital services; increasing illness acuity in both inpatient and outpatient settings; concern over increases in hospital service use; nurse shortages; and strategies to increase or otherwise better manage capacity.

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