An ambitious plan released last week that would insure all Americans while saving $1.5 trillion over 10 years could stir healthy debate, but may be too ambitious for Congress to turn into policy, experts say.
It’s laudable that the Commonwealth Fund in its report, Bending the Curve, Options for Achieving Savings and Improving Value in U.S. Health Spending, is seeking to attain universal coverage and improve the health system’s performance and efficiency, said Leighton Ku, senior fellow with the Center on Budget and Policy Priorities.
“Whether our political leaders can help attain these goals remains to be seen,” Ku said. The past year “has shown that it can be very difficult to achieve broadly held objectives for healthcare if the federal government remains gridlocked.”
The American Hospital Association didn’t sound eager to jump onboard. “We are having our own discussions with all stakeholders about a framework for change that would provide coverage for all, focus on preventive care and improve quality, technology and efficiency,” said Richard Pollack, executive vice president with the AHA, in an e-mailed statement via a spokeswoman. “We look forward to working with others about ways to improve health and healthcare for America,” Pollack said.
Officials with the Federation of American Hospitals declined to comment.
The report analyzed 15 different federal policy options that could ease healthcare cost pressures while improving quality, and combining them with a universal coverage plan that would blend public and private insurance.
Major overhauls to the Medicare system were recommended, such as limiting payment rate updates for physicians and hospitals in high-cost areas, and replacing Medicare fee-for-service with fixed prospective payments per episode of care.
A hospital pay-for-performance system should be established, based on a current demonstration project taking place between the CMS and purchasing alliance Premier. The effectiveness of existing pay-for-performance programs remains unclear, according to two new reports, while the CMS is planning to push hard for hospital pay-for-performance in 2008 (See stories, p. 12).
The hospital pay-for-performance approach, the report estimated, would save $34 billion over 10 years, with the savings accruing through reduced Medicare payments, as a result of decreased hospital readmissions.
The report’s authors also asserted that “estimated savings would be greater” if all payers adopted similar pay-for-performance policies.
Coordination of payments could yield savings, too. All payers should be required to adopt Medicare payment rates and methods for hospitals and physicians, an option that could result in net system savings of $122 billion over 10 years, according to the report.
“The report illustrates there are policy solutions out there that will save money and ensure that Americans get improved value for their healthcare dollars—but we need to start now,” said Commonwealth Fund President Karen Davis, during a teleconference to release the findings.
But some of the approaches may not be cost-effective over the long term, noted some sources. The report recommended a much recycled idea in healthcare politics: that HHS should be given the authority to negotiate with Medicare drug plans for their enrollees, a measure that would save $43 billion over 10 years. Yet, that’s not what the CMS’ actuary and the Congressional Budget Office concluded in their analyses of this approach, a CMS spokesman said. The CBO earlier this year in analyzing legislation that would allow for these types of negotiations to take place, determined that HHS would not be able to negotiate prices more favorable than those obtained by prescription drug plans under current law.
And not all of the options would result in savings for everyone. Authors of the Commonwealth Fund report acknowledge that in their suggestion for recalibrating the benchmark rates for Medicare Advantage plans by setting the rate for plans in each county at a level equal to the projected per capita spending under traditional Medicare.
This option, the authors estimate, would send a price signal through the market “that encourages higher rather than lower costs among those plans,” resulting in an estimated system savings of $50 billion to the healthcare system over 10 years, and billions more in savings to the federal government. Yet, beneficiary spending under this approach would increase by $74 billion.
The report assumes that those who joined Medicare Advantage will want some of those benefits “and would pay extra to replace them or would have to pay more to join the managed-care plans, if there weren’t extra federal subsidies,” Ku said. “In addition, some people who return to fee-for-service Medicare might have to spend a little more to get benefits that were added bonuses in the Medicare Advantage plans,” he added.
In other recommendations, the authors suggested placing a 1% assessment on insurance premiums and Medicare outlays to help finance and accelerate health information technology adoption, plus levying taxes on tobacco and sugar-sweetened soft drinks to reduce obesity and tobacco use.
Some of these ideas are more sensible than others, said Alexander Vachon, a Washington-based healthcare consultant. While the health IT component of the report may have a chance, “I’d say no on the ‘sin’ tax on soda,” he said.
No single approach will solely address rising costs and inefficiency of the healthcare system, said Cathy Schoen, senior vice president of the fund, during the teleconference. “It will take several approaches and well-designed insurance” to achieve this goal, she said. Health spending in the U.S. is predicted to increase from $2 trillion to more than $4 trillion over the next 10 years, the fund stated.
