We Need Long-Term Strategies
Spending on health care continues to rise rapidly and accounts for a growing share of our national economy. Increasing health care costs drive up health insurance premiums. As a result, fewer businesses offer health coverage, millions of Americans go without insurance and even those with coverage pay more when they need care. The cost of care also makes it hard for government to support health care for the poor and elderly.
Many health reform proposals focus on finding someone else to pay for the high costs of insurance and care. Employers want employees to pay more, and workers want the company to pick up most of the tab. Government limits how much doctors are paid to care for the poor through Medicaid, and insurance companies try to negotiate lower provider payments. Such approaches may offer short-term relief for some but don’t address spending for the system as a whole.
Moving beyond efforts to shift costs among payers, there are four long-term strategies to slow overall health spending growth:
• Change the way care is delivered. Not every health condition requires a doctor’s attention or a hospital’s infrastructure. Smart use of lower-cost settings of care, lower-cost professionals, technology and self-care holds promise to reduce costs without compromising quality;
• Change the way care is paid for. Today, most doctors are paid by the visit, and most hospitals have no financial incentive to reduce admissions. A new payment system could compensate providers for health outcomes rather than number of services delivered;
• Encourage prevention and healthy lifestyles so that less health care is provided for preventable conditions;
• Eliminate overuse of inappropriate or ineffective services, drugs, and devices, and encourage appropriate and cost-effective approaches.
Comparative effectiveness (CE) research holds potential to contribute to the fourth approach, eliminating overuse. By reviewing scientific findings to assess what treatment works best, for whom, and under what circumstances, CE aims to bring strong evidence to bear in treatment decisions by physicians and patients. For a particular patient situation, there are often several treatment options – ranging, for example, from watchful waiting to major surgery – with a range of possible outcomes. CE helps patients and doctors assess and choose among these options.
Using CE would result in less aggressive and less costly treatments for some patients, but it would lead to earlier or more aggressive intervention for others. At this point, we just don’t know if widespread use of CE would save money. If there were savings, they would depend on specific findings, and whether those findings changed how medicine is practiced and how insurance companies pay for care.
CE findings won’t change care delivery or cost unless results are accepted by patients and doctors. Only a few conditions and interventions have been extensively studied; but even when findings are clear, Americans have been slow to accept them. For example, a large 2002 study showed that generic drugs are more effective in treating high blood pressure than more expensive brand-name drugs, yet the heavily marketed brand names are still widely used. And, while a recent Kaiser Family Foundation/ Harvard survey shows most people think insurance companies should use CE to decide what to cover, support declines dramatically with the reminder that CE findings might overrule a doctor’s recommendation.
CE is an important tool to better align the use of health care treatments with what’s known to work. It would probably identify some costly care that could be eliminated without compromising health outcomes. Pursued in concert with other approaches, such as changed provider and patient financial incentives, CE might eventually help us spend less on some health services. But CE’s potential impact is broader than its implications for health spending. It holds promise to help improve the quality of health care delivered, the value we get for the money we spend, and ultimately, our health.
Preventing Rather Than Treating Illness
In order to talk about reforming how providers are paid whether it is fee-for-service, capitation, or at-risk contracts, it is first necessary to talk about why we need to reform it.
Disease and disability are doing more than harming the health of Americans. The costs of medical care and an unhealthy workforce are crippling the U.S. economy and its ability to compete in the world market. We’ve heard the litany of reasons why save one—preventing rather than treating illness.
Preventing illness—a major feature of a functional health care system—is not valued in the United States, and is usually measured in terms of dollars spent and lives lost. Currently, we’re not spending a lot of dollars on improving our health and we’re losing a lot of lives. The leading causes of preventable death — tobacco use, physical inactivity, diet, and alcohol use — account for about 1 million deaths annually and for nearly 20% of total healthcare expenditures. In a healthcare system that spent about $2.2 trillion in 2007, this represents almost $450 billion. The real cost, of course, is premature loss of human lives. The financial incentives that would spur the efforts to control the underlying causes of preventable death, however, are severely inhibited. Why? In the current system, resources are heavily concentrated on paying providers for the treatment of disease—the more advanced the disease, the more handsome the payment. Oft times for tests and procedures of uncertain effectiveness. Yet, only 2-3% of health care dollars are expended on avoid the diseases that drive this spending.
Part of the reason that we have failed to finance efforts that improve our health comes down to basic economic principles. While the cost of preventable diseases is enormous, there is no immediate return on investments in early clinical intervention or prevention. Any savings would most likely occur in the relatively distant future, beyond normal budget cycles and political campaigns, and returns from any upfront prevention investments by insurance payers would most likely be reaped by another payer many years from now. Our current system of employer-based third-party insurance has strengths and weaknesses on its own merit, but it is clearly not a good fit for efforts to keep us healthy. Barring a radical shift in provider reimbursement, our current approach of squeezing nonmedical costs into the medical reimbursement system is not a sustainable option.
A focus on ensuring good health could strikingly alter this dysfunctional and inefficient characteristic of the U.S. health care system. It would bring about a new payment model that takes into account a core principle—clinical and community preventive services are complementary. What do I mean by this? Some preventive interventions (e.g., colonoscopy screening for colorectal cancer) happen in a clinical setting, where they are delivered by a health care professional; these are known as clinical preventive services. Community preventive services are put into practice where people live, work, and go to school and include policies, programs, and services that aim to improve the health of the entire population or specific populations that have far worse health outcomes that the general population. Any new payment model has to recognize that a doctor’s advice to make a lifestyle change is of little good if the resources for change do not exist in the community. Moreover, it must understand that any patient can be advised to exercise regularly, but may not succeed if there are no safe places to walk outside.
This form of payment system would ensure smooth handoffs among primary care, specialty care, community health, and allied health professionals in helping patients change behaviors or obtain services early. It would move us from the payment for specific preventive services to, for example, blending capitation with fee-for-service and pay-for-performance model to support the integration of population and personalized care.
Not all preventive services are effective and not all effective services offer good value on the dollar. Beyond cost, the logic that it is better to prevent illness than to wait until people are sick and then try to catch up is compelling.
Not Just Getting Coverage, But Keeping It
I start with the assumption that the vast majority of Americans—including those that are uninsured—want health care coverage. They know that being uninsured means living sicker, dying younger, and being one emergency away from financial ruin.
So the main issue isn’t how, it is how to remove the significant barriers to getting coverage and care. Is it available? Is it affordable? Is it administratively simple?
And health reform isn’t just providing aid to the uninsured, but helping those with coverage keep it. Too many Californians feel that their coverage won’t be there when they need it. Maybe they’ll have lost coverage when switching jobs or gone through a divorce. Maybe the insurance they have doesn’t cover the treatments they need.
Right now, most Californians get subsidized group coverage, through the two pillars of health coverage: employer-based coverage, and public insurance programs. Just over half of Californians (about 19 million) get on-the-job benefits, but many who work don’t qualify or can’t afford what is offered. In fact, over 80% of those who are uninsured are workers or the family members of workers.
Just about a third of Californians (about 10 million) get coverage through Medicare (mostly those over 65), Medi-Cal and Healthy Families (very low-income children, seniors, and people with disabilities), or other public programs. But there are many even under the poverty level who don’t qualify (for example, because they don’t have a child at home), and many administrative barriers for those who do.
Those who face the biggest barriers are those who are not eligible for either job-based or publicly-subsidized coverage, and have to attempt to buy as individuals. The individual insurance market is the most expensive, least efficient way to get coverage. There’s high overhead costs, with the marketing and broker’s fees, and other efforts to sell insurance one-on-one. More than that, individuals have little market power, and are at the mercy of the big insurers. In fact, the insurers can charge differently, or choose to simply deny you coverage based on your health history. There are many who can’t buy coverage at any price, based on their “pre-existing conditions.”
It is starting from this patchwork of a health system that many of the health reform proposals, including that of President Obama, would begin. He, along with many of his rivals for the Democratic nomination, started with the assurance that those consumers that want to keep the coverage they have can do so. The reforms would simply increase the security and stability of that coverage; provide new options, including a public health insurance option; and expand such coverage in all these form to include everyone, as part of a broader effort to bring down costs for all.
The focus, thankfully, is on group coverage. He would bolster employer-based coverage by requiring large employers to provide a minimum contribution to workers’ care, providing assistance to some smaller businesses, and providing new affordable options for them. He would expand the eligibility for some existing safety-net programs. Another bill in Congress takes this several steps farther, creating a single-payer system where everybody is in the same group policy.
For those who are left to get coverage as individuals, they still need significant help, and not just significant subsidies to make coverage affordable for the broad middle-class. There is a growing consensus—even within the industry—that we need to fundamentally change the way insurance companies do business. They should compete on quality and cost, and not—as they do now—on how aggressively they can collect premiums from healthy people and avoid sick people that actually need coverage. Consumers should also have the choice to buy into a public health insurance option, as another way to keep the private insurers honest. We are proud to be working with a national coalition, Health Care for America Now!, to work
So should people be required to buy coverage? It’s an impossible requirement in the current system. Governor Schwarzenegger started with that concept of “personal responsibility” a few years ago, but the concept forced him to recognize that it could not work without “shared responsibility,” from employers, the health sector, and government. After years of opposing such efforts, he eventually supported broad public program expansions, a minimum employer contribution to coverage, and significant oversight and regulation of insurers as part of a broader package.
That said, any health care system will require everyone to pay their fair share. To remove bureaucratic hassles, everyone should be automatically enrolled in coverage, but the requirement to keep coverage should be contingent on whether coverage is indeed available, affordable, and adequate. But then that will be a continuing public challenge for our political leaders, rather than a personal challenge for everyday people.