Healthcare spending is forecast to increase from US$3 trillion in 2014 to US$5.2 trillion in 2023, reflecting a compound annual growth rate of 5.9 percent. US health care expenditures on a per capita basis are 1.9-2.6 times the amount spent by other developed nations despite having a much younger population. An Institute of Medicine workshop from 2010 suggested that 30 percent of spending results from unnecessary or inefficiently delivered services, price variation, excess administration costs, missed prevention opportunities and fraud. Among the contributors to the disparity in per capita spending are a fee-for-service payment system encouraging volume (not value), a focus on acute intervention rather than chronic care management, excessive specialization, fragmentation of care delivery, oligopolistic competition (in most major markets and product segments) and an unwillingness by the federal government to mandate pharmaceutical price controls. US competitiveness is being affected. Healthcare, social security and interest payments are forecast to account for 85 percent of incremental federal government outlays in the next decade. As a result, the Center for Medicare and Medicaid Services (CMS) has initiated a series of payment reforms that are likely to transform healthcare delivery within the next three to ten years.
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