We spend too much on health care in this country—U.S. health care spending has spiked to more than 17 percent of our gross domestic product. Insurance has become outrageously expensive, which is one of the reasons we need health care reform.
To understand why the cost of health insurance continues to increase, we need to understand why the cost of overall health care spending is rising. Most health care over the past 20 years has been reimbursed under a fee-for-service model, a flat sum for each test or procedure provided to patients regardless of outcome. As a result, the U.S. both orders and spends more on medical tests and treatments per person than any other country. Yet, we show no better health outcomes for patients.
This lack of accountability for outcomes compounded with a model that rewards volume over value has created a bloated system. While an MRI in the U.S. costs four times more than an MRI in France, increases in U.S. life expectancy have flatlined relative to Western Europe.
Physicians and business school professors often speak of “bending the cost curve”—decreasing the rate at which health care costs rise. If we can redesign health care delivery to reduce overall spending and improve patient outcomes, then the cost of providing health insurance becomes a much smaller problem. The flip side of that equation is that if we don’t tackle issues of quality and efficiency in the health care system, then whatever way Congress ends up choosing to provide health care coverage won’t matter; health care costs will become increasingly unaffordable and erode access to coverage as everyday Americans are priced out of the insurance market.
Initiatives from the Affordable Care Act, including Accountable Care Organizations and Medicare’s bundled payment program, began shifting some health services from fee-for-service to fee-for-value, evaluating quality relative to cost. These included penalizing health systems for high readmission rates and linking physician payments to better patient health outcomes. Recent evidence suggests that these programs may be linked with fewer readmissions, a good proxy for better outcomes, and reduced health care spending respectively.
The Senate health care bill, on the other hand, has no theory of cost control. It simply cuts funding for health care without addressing the root cause of rising costs. Even the last-minute horse trading over health savings accounts and opioid funding has largely focused on who pays for health care, rather than how we receive it. GOP proposals over the past year have largely placed the burden on health insurance companies to drive down the overall costs of care, calling for high deductibles and co-pays that shift costs directly to patients to make them “smarter buyers” of health services.
But there is no easy way for a patient to become “smarter” at purchasing health care. Insurance companies can experiment with financial incentives—or disincentives—all they want, but those can be dangerous for patients’ health. People can’t compare and purchase health care the same way they do with apples or airline tickets. The cost of medical treatment is shrouded in mystery and runs tens of thousands of dollars. The choice of which service is right is dependent on expertise that the patients often don’t have. When deductibles are too high, evidence suggests patients may opt to forgo care entirely. That may lower costs in the moment, but it won’t make anyone healthier. And it won’t lower the financial burden in the long run.
Insurance companies fundamentally don’t have the clinical or managerial expertise to create the changes that health systems need to improve quality and reduce costs. Insurers won’t improve coordination between hospitals, streamline clinician workflows, or increase surgical safety standards. They won’t get patients to take their medications more often, come in for preventive care, improve health IT infrastructure, or reduce hospital infection rates. Those changes, the ones that truly drive efficiency and reduce overall spending in health care, will have to come from concrete changes in policy and the operational efforts of clinicians. Current policy changes are moving our health care delivery system in the opposite direction. Tom Price, our health and human services secretary and a staunch critic of Medicare’s bundled payment program, delayed mandatory experiments that would have tested outcomes-based payments on a national scale, despite evidence demonstrating cost savings. Similarly, with all eyes focused on the Senate bill, the Centers for Medicare and Medicaid Services released a proposed rule to exempt more than 100,000 physicians from a bipartisan program that would have shifted their services to a value-based care model.
Cutting Medicaid may achieve Republicans’ goal of shrinking the fiscal growth of the program, but rather than incentivizing states and health care organizations to deliver better, more efficient care, the Senate bill leaves people without health care coverage altogether. If conservatives are serious about reducing health care costs, their policies should focus less on privatizing coverage and more on how we measure and evaluate data on patient outcomes and physician performance. This practice will provide evidence-based information to both hospitals and the federal government about which interventions and treatments work best and allow them to set prices for services in accordance with their value to patients.
Instead of debating whether poor people should have health insurance, health care reform in Washington should be focusing on ensuring we get the best bang for our buck with the insurance we have. Given the exorbitant cost of coverage, the least America deserves is the quality of care to match.