When Lower-Cost Health Care Isn’t a Good Deal

by JHI Staff on April 26, 2013

A bipartisan team of three former U.S. senators and a former Congressional Budget Office director have come out with a report suggesting an approach to reeling in the high cost of health care in the U.S. What I really like about the effort is that the group decided early on that the problem of high health care costs isn’t really mostly about costs and payment—it’s about improving health and health care quality, while doing it at reasonable cost.

As the four members of the team write in an article on the report:

Too often we in Washington talk about health care as though it is little more than a line item on a budget table. Those of us who have experienced the best of health care know that is not how care should be delivered or policy crafted in this most personal of issues. Our country can achieve a higher-value health-care system....

This emphasis on value is key. In a nutshell, value in health care is about what the system costs compared to what we get out of the system—that is, the quality of care and the extent to which our health is improved. When we talk about health care costs by themselves, it’s like talking about “the cost of going out to eat” without considering whether we’re getting a fast-food burger or a three-course seafood feast out of the deal.

The result of health care discussions that focus on cost, without considering what we get for the cost, tends to be a zero-sum game that lowers the bill for some parties—typically for many consumers, employers and/or Medicare—while leaving others, usually providers and insurance companies, to shoulder the resulting drop in revenues. It’s not that such shifts are necessarily inappropriate or unhelpful. It’s that in and of themselves, they aren’t likely to leave us getting more or better or even the same level health care for less money on average, because they don’t address the whole system. As the team puts it:

Health-care cost drivers are complex and interwoven, but the most problematic ones we identified are the inefficiencies, misaligned incentives and fragmented care delivery in the current fee-for-service reimbursement system....In all our proposals, we sought to avoid simple cost-shifting as a means to generate federal budgetary savings....We also focused on reforms that will incite transformation across the health-care system.

That’s a much more ambitious goal, and one that is much more likely to give us more for our money, regardless of who is paying the bills. The full report offers more than 50 specific recommendations, but let me just quote summaries of three of them:

Empower patients by promoting transparency that is meaningful to consumers, families and businesses, and streamline quality reporting.

Advance the nation’s understanding of potential cost savings from prevention programs, through support for research and innovation on effective strategies to address costly chronic conditions.

Offer incentives to states to promote policies that will support a more organized, value-driven health-care delivery and payment system, such as supporting medical liability reform and strengthening their primary-care workforce.

These are the sort of goals that are going to make our system not just cheaper—the report reckons adopting the recommendations would lead to more than half a trillion dollars in savings over ten years—but better. Indeed, there isn’t a health care system in the world that wouldn’t be improved by adopting these principles, and they come up frequently in our conversations with government and private collaborators around the world as we work to build and improve health care infrastructure in different countries.

Yes, let’s figure out how to keep health care affordable, so that everyone can receive good care and maintain good health without going broke doing it. But let’s not forget that what we’re shooting for is value, not just lower bills.


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When Lower-Cost Health Care Isn’t a Good Deal | jhublogs
April 26, 2013 at 11:59 am

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Ron April 27, 2013 at 5:33 pm

Well done. If only our politicians had such focus.


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