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Slowing the Rise in Health Costs
The good news is that many of the reforms analyzed by the Commonwealth Fund might improve the quality of health care delivered to Americans.
Slowing the Rise in Health Costs
With the disjointed American health care system in perpetual crisis, it is essential to find ways to slow the relentless rise in costs, without jeopardizing the quality of care. There is no single solution. But a broad range of reforms could combine to produce worthwhile savings.
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The Commonwealth Fund, a New York-based foundation, issued a report this week analyzing 15 policy options for the federal government that could reduce national spending on health care by as much as $1.5 trillion over 10 years — even after spending more than $200 billion to provide health coverage for all Americans.
The estimated savings amount to a modest 4.5 percent reduction from a projected $33 trillion in cumulative health care spending over the decade, and even these will be hard to achieve. Yet there is no choice but to try. The good news is that many of the reforms might actually improve the quality of care delivered to Americans.
The essential reform is to adopt technology that would allow information to be shared among all the doctors and institutions that care for a patient, lessening the chances of errors and duplication and encouraging better coordination of treatment. That would require an initial investment in technology, but, according to the study, could produce a cumulative savings of $88 billion over a decade. The Commonwealth Fund also lays out a reasonable approach to pay for that initial investment: a 1 percent charge on private insurance premiums and on the government’s Medicare expenditures.
The study’s biggest projected savings — $368 billion over 10 years — would come from establishing a public-private center to evaluate which treatments work best for which patients. The goal is to deter doctors from dispensing expensive treatments and drugs that don’t work, aren’t needed or are no better than cheaper alternatives. That is a superb idea and could produce big savings over time, although we are skeptical that the initial payback would be that high. Other savings are projected if the health system stops paying doctors for each service performed — an incentive for multiplying services — and instead pays for treating an entire episode of illness.
A few options that make good sense are sure to excite strong lobbying opposition. One would eliminate the unjustified subsidies granted to private Medicare plans. Another would allow the government to negotiate lower prescription drug prices for Medicare. More savings could be found if the government limited Medicare payments to doctors and hospitals in high-cost areas of the country, giving them the strongest possible incentive to adopt more efficient practices.
The Commonwealth Fund stresses that it is not advocating any of these reforms but is simply examining the potential of various options to slow the rate of growth in future health care expenditures. Unfortunately, the foundation failed to assess one controversial proposal — a Medicare-like insurance program to replace private insurance — that, by some estimates, could produce even bigger savings.
Yet the Commonwealth Fund has performed a public service by putting dollar estimates on the rather abstract proposals being discussed by many of the presidential candidates. If the United States hopes to bring health costs under control, it will need to start on these or other options as soon as possible.