Healthcare spending is one of the biggest issues in the country today as national healthcare expenditures grew 3.9 percent in 2011 to a total of $2.7 trillion. Two articles in the August 2012 New England Journal of Medicine try to prescribe the best ways to handle those rising expenses and attempt to stimulate discussion and debate to address the problem ahead of the 2012 elections.
The articles focus on two schools of thought: new innovations versus market-based principles. Twenty-three authors gave their input on the new innovations side, including former CMS Administrator Don Berwick, MD, National Institutes of Health bioethicist Ezekiel Emanuel, MD, and several physicians and scholars from the Center for American Progress, the Brookings Institution and other organizations. Three authors wrote in favor of market-based incentives, including Joseph Antos, PhD, of the American Enterprise Institute.
Systematic approach and new innovations
The first group of authors wrote the U.S. healthcare system needs a fundamental change. To contain costs effectively, they argued solutions must target medical prices, quality of services, public and private payors and administrative costs.
Some of their innovative solutions included payment rates within global targets, continued acceleration away from fee-for-service payments, competitive bidding for all healthcare commodities such as medical devices and lab tests, tiered products in health insurance exchanges, full transparency of prices and the drastic reduction of administrative costs through information technology, among others.
"Payors could simply shift costs to individuals. As those costs become more and more unaffordable, people would severely restrict their consumption of healthcare and might forgo necessary care," according to the article. "Alternatively, governments could impose deep cuts in provider payments unrelated to value or the quality of care. Without an alternative innovative strategy, these options will become the default. They are not in the long-term interests of patients, employers, states, insurers or providers."
Market-based incentives
Those in favor of a market-based approach wrote that open-ended subsidies to beneficiaries and price-controlled reimbursements to providers should replace fixed-dollar subsidies. In other words, it would shift Medicare from a defined benefit pension plan approach to a defined contribution pension plan, or a voucher system.
The authors argue market reforms for Medicare and private insurance are most needed. They wrote premium support would change the incentives in Medicare and "give seniors an incentive to select lower-cost plans," and a limit to the tax subsidies associated with employer-sponsored health insurance would spur employees to find more cost-efficient coverage.
"A market-based approach that relies on competition and financial incentives can promote efficient healthcare delivery, reduce the unit cost of care and thus help resolve the federal budget problem without placing limits on how individuals choose to spend their own money," the authors wrote.
What's your take on the issue? What do you think are the best ways to control healthcare spending in the United States? Email your thoughts to Bob Herman at bherman@beckershealthcare.com.
The articles focus on two schools of thought: new innovations versus market-based principles. Twenty-three authors gave their input on the new innovations side, including former CMS Administrator Don Berwick, MD, National Institutes of Health bioethicist Ezekiel Emanuel, MD, and several physicians and scholars from the Center for American Progress, the Brookings Institution and other organizations. Three authors wrote in favor of market-based incentives, including Joseph Antos, PhD, of the American Enterprise Institute.
Systematic approach and new innovations
The first group of authors wrote the U.S. healthcare system needs a fundamental change. To contain costs effectively, they argued solutions must target medical prices, quality of services, public and private payors and administrative costs.
Some of their innovative solutions included payment rates within global targets, continued acceleration away from fee-for-service payments, competitive bidding for all healthcare commodities such as medical devices and lab tests, tiered products in health insurance exchanges, full transparency of prices and the drastic reduction of administrative costs through information technology, among others.
"Payors could simply shift costs to individuals. As those costs become more and more unaffordable, people would severely restrict their consumption of healthcare and might forgo necessary care," according to the article. "Alternatively, governments could impose deep cuts in provider payments unrelated to value or the quality of care. Without an alternative innovative strategy, these options will become the default. They are not in the long-term interests of patients, employers, states, insurers or providers."
Market-based incentives
Those in favor of a market-based approach wrote that open-ended subsidies to beneficiaries and price-controlled reimbursements to providers should replace fixed-dollar subsidies. In other words, it would shift Medicare from a defined benefit pension plan approach to a defined contribution pension plan, or a voucher system.
The authors argue market reforms for Medicare and private insurance are most needed. They wrote premium support would change the incentives in Medicare and "give seniors an incentive to select lower-cost plans," and a limit to the tax subsidies associated with employer-sponsored health insurance would spur employees to find more cost-efficient coverage.
"A market-based approach that relies on competition and financial incentives can promote efficient healthcare delivery, reduce the unit cost of care and thus help resolve the federal budget problem without placing limits on how individuals choose to spend their own money," the authors wrote.
What's your take on the issue? What do you think are the best ways to control healthcare spending in the United States? Email your thoughts to Bob Herman at bherman@beckershealthcare.com.
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