Stuart Altman, Connie Horgan and Michael Doonan from Brandeis came to the state house this week to hold an informal discussion about health care cost control with legislators and staff.
This conversation grew out of the health care policy forum that I attended and summarized recently. In my summary I had remarked that the forum did not include any specific state policy recommendations.
The forum spoke to the possibility that new-model integrated care networks could improve both cost and quality. The forum suggested that there are strong market pressures motivating the new models. I took away from the forum that state government might be able to act in collaboration with Medicare to advance the new models. If Medicaid, Medicare and the GIC, together with Blue Cross, all moved in this direction, it might be enough of a movement to force change in the market overall. These entities control well over half of the market. I concluded that state legislative action might not be central to the reform — perhaps some technical legislation, but the real push could come from the Governor.
The follow-up conversation left that possibility open — the executive branch might be able to take market action on its own — but did put a policy proposal on the table. The Brandeis group suggests that the state create an independent commission to set up a health care budget for the state and perhaps mandate use of specific new global payment mechanisms. Click here for their paper summarizing the proposal. Certainly, over the months to come, either the executive branch will take a bold step forward or we in the legislative branch will have to do something along these lines.
Another point that came out was that it makes sense to work on tort reform — not because malpractice law suits are a big cost driver, but because they are a big irritant for physicians. If we are going to ask physicians to change their practice models, tort reform might be something that we can give them as a major inducement. Perhaps we could give liability protections to new care models including certain quality management protections as an inducement to enter those models.
Other points that came up in the discussion included:
- It’s useful to speak of increased health care spending rather than health care costs, because much of the increase is due to volume not price.
- Most of the increase in health care spending has been born by individuals and businesses because the major public payors have been holding rates well below costs — perhaps 60 cents on the dollar while private payors are covering 120 cents on the dollar.
- Limitation of growth will mean some losers in the health care industry, but the new quality information that we have may allow us to protect patients in the squeeze.
- Certainly, there will also be issues of market power as big networks form. This may require government intervention, by law suit or by regulation.
- True also that there may be some jobs lost in the squeeze, but we are also losing jobs in other sectors right now because of increased costs of health care spending.
- We have to be able to improve primary care without more primary care physicians — we don’t have them; need to use other professionals.
- Our health insurance mandates do add up to significant cost add-ons for some payors, perhaps over 12%.