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As regular readers know, the topics of cost control and affordability of health insurance are starting to dominate the CommonHealth blog. This focus on costs makes sense: as many contributors have noted, the coverage expansions in Chapter 58 will not be sustainable if we don’t find ways to control rising medical spending. If we’re going to get serious about moderating costs, we’re going to need to ask—and answer—some very hard and contentious questions. Here are a few of my top candidates:
#1: What about regulation and supply side planning? Health care costs are higher in the US than any other country for many reasons: administrative complexity, fragmented financing, lots of uninsured people, and the prevalence of profit-making organizations in many sectors. But at the top of the list are higher prices—for drugs, devices, physician services, hospital days--you name the service—along with the lack of effective mechanisms for controlling supply. Our “romance with competition” over the past 20 years has made this problem even more acute, by fostering growing market power within much consolidated provider and insurance systems. While our newest infatuation with quality improvement has much to commend it—who could seriously oppose eliminating overuse and misuse, for example--there’s no evidence that improving quality will do much to stem health care inflation—at least not unless it’s coupled with some limits on prices and supply. Virtually every country that’s been more successful than the US at controlling health care costs—and that would be most other countries—has price regulation and central planning as central features of its health care system.
#2: How can we bring back budgets? And while we’re learning from other countries, we need to take a hard look at health care budgets—another cost control technique that’s used in just about every other health care system. It was no coincidence that the last time we made any progress on moderating medical costs was during the era of capitation—one form of health care budgeting.
Now I know that even uttering the word “capitation” in many parts of the health care system is asking for serious trouble. So we’re going to need to adopt a new phrase. Most other countries use the term “global budgets.” Whatever we call it, the idea of imposing prospective limits on health care spending, and then leaving it to groups of providers to decide how to best spend limited resources on a defined population of people to best promote health, is our best hope for encouraging innovation in the delivery of services and moderating medical inflation. Of course, this type of budgeting would encourage providers to be part of organized and integrated delivery systems, which would be a great improvement as well.
#3: Where is the public health? We know that much of the increase in health care costs over the past decade is rooted in problems like rising rates of obesity, which require public health strategies. So, the best ways to improve health and reduce medical spending have little to do with providing more medical care, however high the quality, or promoting the adoption of electronic medical records, or even expanding health coverage. There’s a lot in Chapter 58 that is directed at improving public health but we’ve still got a long way to go to reverse the budget cuts that have occurred over the last decade, let alone to invest the level of resources in prevention and health promotion that are needed to achieve optimal levels of health. Some public-private partnerships in this area might be a fine use for some of the health plan profits I wrote about last month….
#4: When is antitrust law really a barrier to collaboration? Many of the most interesting cost containment strategies would require well-funded and deep collaboration among health plans and/or providers, in areas like chronic care and high cost case management, administrative simplification, promoting the application of evidence-based medicine, rational provider payment systems, innovative e-health, and even public health. But very often the automatic answer to any suggestion about such collaboration is that it’s prohibited by antitrust law. It’s hard for those of us who aren’t lawyers to know if this is a legitimate issue or just a way to stop conversations that insurers or providers don’t want to have. But I sure would like to know how much Massachusetts could push the envelope on encouraging, or even requiring, collaboration in areas where competition has limited or no value.
Harvard School of Public Health
P.S. And while I’m writing about the need for collaboration, I need to note that I hope we can avoid replicating in our cost containment efforts the type of proliferation of organizations and fragmentation that’s occurred in the quality improvement area. We’re lucky to have so many resources and so much energy devoted to patient safety and quality in Massachusetts. But I cannot imagine that we wouldn’t make faster progress if we had fewer organizations and a sharper focus. How do all of you find the time to go to all of those board meetings anyway?
This program aired on August 27, 2007. The audio for this program is not available.
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