Up, up, and away
Health care costs are soaring - bankrupting patients, providers, employers, and taxpayers alike. Since 1999, employer-sponsored insurance premiums have risen by 131 percent. Spending on Medicare and Medicaid, which already consumes 21% of the federal budget, will double in the next 30 years, drowning out other national priorities such as education, national defense, and social security. It's no wonder that much of the health care debate has centered around "bending the cost curve." The bills moving through congress have made small steps toward this goal by encouraging health IT, comparative effectiveness research, medical homes, bundle payments, among other initiatives.
Even Senator Reid's inclusion of an opt-out public plan, however, leaves work to be done. On average between 1970 and 2003, annual Medicare spending has increased at a slightly lower rate than private health insurance spending: 9.0 vs. 10.1 percent, respectively. The solution to bending the curve lies in reforming the finance and delivery of health care -- a tricky political gambit since every dollar of the $2.5 trillion spent on health care represents a paycheck earned and interest staked.
First, health care needs new financial incentives to encourage wellness and reward quality. The current fee-for-service system has been found wanting on both accounts. Yet, more research is needed on how to quantify outcomes and assess quality without creating disincentives for reducing care. To combat this issue, HR 3962, the consensus House proposal, creates the Center for Medicare and Medicaid Innovation to test new payment and delivery models and authorizes a comprehensive Institute of Medicine study to examine the cause of geographical variation in care. While these measures will shed light on the issues, more incentives can be offered to encourage experimentation and innovation among private insurers, providers, and patients.
Second, reform must reduce unnecessary testing and defensive medicine practice - too many Americans receive care they do not need. Defensive medicine alone has been projected to cost over $60 billion per year. With investments in research, Congress has taken steps to enable providers to make more informed decisions, but more can be done. According to CBO Director, Doug Elmendorf medical liability reform cuts costs directly by decreasing malpractice insurance premiums and indirectly by reducing the use of unnecessary health care services and tests. CBO estimates indicate that tort reform, one component of medical liability reform, could reduce the federal budget by $54 billion over 10 years. Beyond balancing the federal budget, these reforms would reduce total health care spending by $11 billion in 2009 alone.
The comments to this entry are closed.