Health Care Policy Experts Release Steps for Containing Costs and Improving Value in Health Care

Proposal Includes Accountable Payment Systems, Insurance Reform and Personal Responsibility

    • September 1, 2009

With the President, members of Congress and key stakeholders seeking aggressive reforms to slow spending growth while improving value, a group of 10 health care policy experts today released a set of concrete, feasible steps that could achieve this goal. The plan, “Bending the Curve: Effective Steps to Address Long-Term Health Care Spending Growth,” focuses on reducing the growth of health care spending, while also improving quality.

The effort was convened by the Engelberg Center for Health Care Reform at Brookings, with support from the Robert Wood Johnson Foundation. The diverse health care policy experts who joined together to develop the proposal include:

  • Joseph Antos, Ph.D., American Enterprise Institute for Public Policy Research;
  • John Bertko, The Brookings Institution;
  • Michael Chernew, Ph.D., Harvard Medical School;
  • David Cutler, Ph.D., Harvard University;
  • Dana Goldman, Ph.D., University of Southern California and RAND Corporation;
  • Mark McClellan, M.D., Ph.D., Engelberg Center for Health Care Reform at the Brookings Institution;
  • Elizabeth McGlynn, Ph.D., RAND Corporation;
  • Mark Pauly, Ph.D., University of Pennsylvania;
  • Leonard Schaeffer, University of Southern California; and
  • Stephen Shortell, Ph.D., University of California, Berkeley.

The proposal starts from the conclusion that the standard short-term measures to address rising costs— like reducing prices—are not sufficient to succeed. Instead, legislation must support necessary changes and improvements in health care by reforming payment systems, regulations and institutions that currently prevent patients from consistently getting the best quality care at the lowest cost.

“These steps are about accountability and support for what we really want—better care at a lower cost. This plan includes payment reforms, health insurance reforms, and a new focus on personal responsibility, as well as support through better information systems and other reforms to enable these steps to succeed,” said Mark McClellan, director of the Engelberg Center for Health Care Reform at Brookings. “This will not be easy, it will not happen overnight, and it will require commitment on all sides. But we believe that the reform strategy presented here offers the most promise for bending the cost curve and producing the high-value health care system our nation urgently needs, without jeopardizing the access to care that is so important to Americans.”

Risa Lavizzo-Mourey, M.D., M.B.A., President and CEO of the Robert Wood Johnson Foundation said, “Along with achieving coverage for all Americans and improving the quality of health care, health reform must slow the growth of health care spending. The recommendations identified by these experts represent a feasible and responsible way of meeting this objective. Failing to take serious steps to bend the cost curve would undermine not only the sustainability of our health system, but also the credibility of health reform.”

To slow spending growth, health reform must include a comprehensive strategy to increase accountability and support for lowering costs while improving quality. The strategy consists of four interrelated pillars:

  • Invest in better information and tools, such as health information technology, as a foundation to guide and support a reformed system. Critical to these investments’ success is ensuring providers and consumers have the flexibility and incentives to use these tools effectively—for example, incentives to link information technology to actual improvements in care. But reform cannot stop here: These investments are a necessary foundation for cost containment but, implemented alone, will be ineffective.
  • Transition to accountable payment systems that reward providers for delivering lower-cost, high-quality care. Adjustments in Medicare and Medicaid fee-for-service payments can yield short-term savings. However, fundamental reform requires transitioning to accountable payments in these public programs, reinforced by budget pressures to make fee-for-service less attractive over time. Critical to reform’s success is greater institutional flexibility and ability to learn from experience, such as by creating a capacity to rapidly evaluate the impact of reforms in patient care and cost, and by empowering an independent entity with the authority to ensure that steps to improve Medicare and Medicaid sustainability are addressed by Congress.
  • Restructure non-group and small-group health insurance markets and coverage subsidies based on an exchange that pools risk outside of employment and promotes competition on cost and quality. To bend the curve in the employer-provided insurance market, the tax exclusion must be scaled back to foster the design and purchase of more cost-effective benefits. New coverage subsidies should be structured so that people can afford quality care but pay the incremental cost for richer insurance benefits. Finally, Medicare Advantage benchmarks should be reduced through competitive bidding, with quality bonuses.
  • Support and encourage better individual choices to enhance the patient role in improving health and lowering health care costs. Medicare’s benefit design should feature value-based tiered copays and protect against high out-of-pocket costs, while limiting first-dollar supplemental coverage. Reforms should support premium rebates for measurable health improvements. Also, prevention investments should broadly pilot and measure the impact of strategies for helping individuals to achieve a healthy weight and reverse the obesity trend.

“From our diverse backgrounds and points of view, we reached consensus on a set of concrete, feasible steps that show promise for slowing spending growth, while improving quality,” the report’s authors wrote. “This is not meant to be an exhaustive list, nor does it necessarily reflect what we each would propose individually, but rather it is a comprehensive, coherent proposal building on current health reform bills.”