Policies need to restrain growth in healthcare spending, say experts

BMJ 2013; 346 doi: (Published 31 January 2013) Cite this as: BMJ 2013;346:f671
  1. Bob Roehr
  1. 1Washington, DC

The debate on US healthcare policy must focus on overall cost containment, not on shifting costs within the silos of public, employer, and private sector payers, experts told a congressional briefing on 28 January.

Fuelling the renewed policy debate are a report earlier this month from the Centers for Medicare and Medicaid Services saying that aggregate healthcare spending rose at a relatively low 3.9% for the last three years for which information was available1 and broad recommendations from the Commonwealth Fund on how an additional $2 trillion might be shaved from increased healthcare spending over the next decade.2

“We are not talking about fighting over a shrinking pie” of healthcare spending, said Stuart Guterman, vice president and executive director of the Commonwealth Fund’s Commission on a High Performance Health System. “Only in healthcare” could spending $40 trillion rather than $42 trillion be thought of as cuts, he said. “The idea is to use those resources more effectively.”

Karen Ignagni, president of the trade association America’s Health Insurance Plans, argued that a silo by silo approach that focused on government spending on Medicare and Medicaid would lead to cost shifting to the private sector. Conversely, however, as costs increased to employers, some would drop health insurance coverage, and that would add more people to the public rolls.

Although there was a consensus on the need for better integration of the delivery of care, Ignagni said, there were often barriers to achieving this.

Administrative costs could be reduced if all payers and providers agreed to a common set of measures, standards, and reporting. Agreement should be easier to achieve with the shift from a system of reimbursement of fees for services to models in which payments were bundled and that focused on health outcomes rather than how they were achieved.

However, some contracts between insurers and providers prohibited sharing information on outcomes and costs with consumers, Ignagni said. Other regulations allowed an insurer to create “wellness” programs and incentives for group policies but not necessarily for individual policies. She also wanted to remove barriers to the formation of high performance networks of care.

But Robert Galvin, chief executive officer of Equity Healthcare, one of the largest private sector purchasers of healthcare services in the US, cautioned that such consolidation often led to higher price rises as dominant hospitals and other care providers bought up their lower cost competitors. He believes that a combination of regulation and market forces must govern how networks evolve.

Healthcare has been one of the few areas where employment has grown during the recent recession and the slow recovery from it. Some have argued that increased healthcare spending should be applauded for its job creation and that it should not be reined in.

Guterman disagrees. Spending less on healthcare left more money in the pockets of consumers, he said. “That has the potential to create a tremendous number of jobs elsewhere in the economy . . . I think we need to look beyond the healthcare sector and really think about how we can better use those resources to support not only public endeavors like education, public safety, and roads but also more money in the private sector.”


Cite this as: BMJ 2013;346:f671