Cost Containment and Delivery System Reform
US health care costs make up 18% of the Gross Domestic Product, a significantly higher percentage than is spent in other industrialized nations. Despite these expenditures, the US has a higher infant mortality rate of almost 7 per 1000 than 37 other nations and a lower life expectancy rate of 78 years than 50 other nations, according to the CIA World Factbook. US health care expenditures are increasing. Most agree that the rate of increase in healthcare costs is not sustainable and may result in dramatic changes in the financing of public programs and in private insurance.
It is generally recognized that 80% of US health care costs are spent on 10% of the patients, most of whom suffer from chronic conditions such as heart disease, obesity, depression, asthma and diabetes. Ensuring that these patients get appropriate care in the appropriate settings to help manage their conditions will not only improve lives, but could significantly reduce health care costs. If we are to avoid draconian price setting, we need to improve the quality and value of health care. We need to make the health care delivery system more transparent, more accessible to more people, and more cost effective.
One of the most important elements to help ensure patients have access to care would be significant insurance market reforms. Requiring health plans to cover everyone, regardless of health status, and requiring everyone to be covered is a vital first step to improving care and reducing costs. The cost of caring for the uninsured is significant. According to a Milliman, Inc. report commissioned by Families USA, $43 billion in unreimbursed care was provided by physicians, hospitals and other providers in 2008 to the approximately 47 million uninsured persons. Today, the number of uninsured has increased to 81 million people.
In addition, standardization of comprehensive benefit packages to prevent insurance companies from limiting coverage of needed services by chronically ill patients would be an important market reform. A combination of comprehensive coverage and limited individual cost sharing would eliminate economic barriers for individuals who need medical care, helping to ensure people get the right care at the right time, rather than waiting until they suffer from an acute condition that results in an emergency department visit or more serious medical intervention. Making sure people have access to providers for health care and preventive services will help to prevent the onset of more serious, expensive conditions. Standardized benefits and cost-sharing should reduce administrative costs for physicians
and hospitals.
The development of publicly available, consumer friendly information relating the quality of the provider networks offered by each health plan could both improve the quality of clinical care and slow the rate of increase in cost. Private organizations, such as the National Committee on Quality Assurance, and public programs, such as Medicare and Medicaid, are making information relating to clinical outcomes and customer satisfaction available to consumers. This information will help spread best practices across the entire clinical community Newly formed Exchanges, required to be established in each state by the federal health reform law, are required to collect and publicize information relating to the price of coverage and the clinical quality and customer satisfaction with the care provided. Most experts agree that improving the quality of clinical care will help to slow the rate of health care costs.
Within Medicare and Medicaid, new federal programs have been created to support delivery system reform, quality and cost effective care, including the Accountable Care Pilots, the Medicaid Patient-Centered Medical Home program, and the pay for performance initiatives established for hospitals and for the Medicare Advantage program. These are all designed to maximize the ability of providers to care for patients in a collaborative way that makes it easier to ensure patients get the needed follow up and preventive care.
Some of these reforms and programs are included as part of the federal health reform act and in the states. Others are happening through the efforts of the business community and policymakers. All of us in the health community need to work together to improve the health of our patients, our community and to make health care more affordable and a higher value.
Patricia Lynch is the Vice President of Government Relations with Kaiser Permanente.