Susan Dentzer: Toward a Healthy America

May 9, 2013, 4:38 PM, Posted by

Susan Dentzer Susan Dentzer

Many of the nation’s health economists are reviewing recent history to figure out what factors, besides the weak economy, might have caused health spending to slow over the past few years.  That’s a useful exercise, of course, but it’s even more crucial that we be hyper alert to the rocky health spending ahead—particularly as millions of Americans prepare to gain health coverage under the Affordable Care Act.

Towards that end, the Robert Wood Johnson Foundation recently teamed with several other nonprofits to fund four major analyses on health costs. The resulting reports, listed below, offer strategies for achieving a sustainable rate of growth of health spending, up to a trillion dollars’ worth of federal savings over a decade, and major improvements in the care provided to Americans.

In an era characterized by a lack of national consensus on so many pressing issues, these reports have a surprising amount in common. Each calls for even greater acceleration of the move away from fee-for-service payments to health providers, and toward payments pegged to improved health outcomes.  Almost all the reports propose major changes in Medicare and Medicaid, as well as extending payment and reforms to the privately reimbursed segments of the health care system.

Four reports do not a national groundswell make, but they could do provide the rationale for federal legislation, regulations and private sector system transformation that could further constrain health spending while improving care.

Medicare. Most of the reports envision fixing aspects of the traditional Medicare and Medicare Advantage programs, while simultaneously engaging in far broader reforms.

For example, the National Commission report proposes jettisoning Medicare’s troubled physician payment formula, asserting that it “has not worked in practice and shows no prospect of ever working.”  The Bipartisan Policy Center proposes replacing the formula with episode-based or case-based payments tied to quality measures, again breaking the longstanding link to fee-for-service, while The Partnership for Sustainable Health Care report calls for gearing Medicare payments for new treatments to their effectiveness relative to other treatment options already available.

As for the people those programs cover, both the Bending the Curve and Bipartisan Policy Center reports propose a new benefit structure for the traditional Medicare program that would better protect patients from catastrophic costs while imposing a combined $500 deductible for hospital and physician services.  Higher income Medicare beneficiaries would pay higher premiums. And to encourage more appropriate use of care, there would be no more “first-dollar” coverage available in Medigap supplemental insurance – only coverage with a deductible of at least $250, and a limit on covering no more than half of an enrollee’s Medicare copayments or coinsurance.

New Care Systems. More important, the reports recommend that all of Medicare transition to a dramatically new system of care provision and payment.  The Bipartisan Policy Center uses the terminology “Medicare Networks; Bending the Curve calls it “Medicare Comprehensive Care,” and says it would build heavily on emerging accountable care organizations. Providers would be paid capitated rates for assigned patients, and would have to meet a set of quality and performance measures to receive full payment.  These payments would grow over time no faster than the overall economy.   Within five years, Medicare beneficiaries could be encouraged to join these organizations through incentives, such as reductions in Medicare premiums and copayments.

Tax and Antitrust. The reports also agree on a need to cap the federal tax exclusion for employer-provided health insurance.  Taxing individuals on any employer contributions to fund the most expensive health would both raise revenue and curb some of the inducement for greater consumption of health care. What’s more, the reports argue that federal antitrust enforcement should block hospital consolidations that simply give the institutions greater power to raise prices, but encourage such mergers if it results in integrated delivery systems that take on financial risk for delivering inferior quality or excessive costs.

Medical Liability. This favorite issue of physicians is also addressed, with several of the reports recommending major changes in medical liability that would sway doctors away from providing excessive care meant to prevent lawsuits.  One recommendation is for so-called “safe harbor” protections for clinicians who effectively practice recognized standards of care, and call for replacing tort claims with a new system that would directly compensate injured patients.

Of course, if effectuating any of these changes were easy, it would already have happened. Enacting any of these proposals will run up hard against defenders of the status quo. But change begins with a groundswell of agreement around what is possible and desirable.  These reports provide an important starting point for the next round of serious health care reforms.

Susan Dentzer, Senior Policy Adviser at the Robert Wood Johnson Foundation, former Health Affairs Editor-in-Chief and Health Policy Analyst, The NewsHour with Jim Lehrer, is one of the nation's most respected health and health policy thought leaders and journalists.