Piecemeal Reforms Won’t Control Health Care Costs, Report Says

Creating the proper incentives is a critical step toward controlling the nation’s high health care costs, and finding a true solution will require more than a piecemeal reform plan.

That message was advanced by a group of 10 health policy experts who on Tuesday released a report, “Bending the Curve,” and outlined during a conference call what they see as necessary policy steps. Their report was sponsored by the Brookings Institution and the Robert Wood Johnson Foundation.

The suggestions include investing in information technologies, reforming the Medicare/Medicaid payment systems to reward lower-cost care by dropping fee-for-service, taxing employer-provided health insurance and encouraging patients’ preventative care. They also maintained that short-term cost-savings measures, such as cutting Medicare reimbursement rates across the board, cannot succeed in controlling exploding health care costs over the long-term.

Although they noted that Congress is considering some of these recommendations in the context of sweeping health overhaul proposals, they urged a big-picture view.

“It’s important to see all these steps as part of a comprehensive approach,” said Mark McClellan, the director of the Engelberg Center for Health Care Reform at The Brookings Institute. “Not in terms of just individual incremental changes. … The individual steps themselves, if implemented by themselves, may not have much impact on costs, particularly in the short run.”

“And they all fit into a few core ideals, which can be implemented gradually and steadily, not with radical change in the short term. That’s what we think helps make these steps feasible,” he added.

David Cutler, professor of applied economics at Harvard University, said he views his group’s suggestions in the report as “the cement mixer and steel rods” of reform. They are “things that had better be there or your building isn’t going to stand up. By themselves, they aren’t going to make the building particularly beautiful, but they better be there and they better be done right.”

Stephen Shortell, dean of the School of Public Health at the University of California at Berkeley, said the group is recommending that pilot programs and demonstration programs be started around the country to show that these reforms could work.

Incentives for lower cost, higher quality care are also necessary, he said. These steps could take the shape of lower deductibles for consumers if they choose insurers with the highest ratings for giving such high-quality, low-cost care.

And Mark Pauly, professor of health care management at the University of Pennsylvania, said that “most bad things that happen are not the result of bad people but the result of bad incentives.” The same applies to insurance, he said, adding that there are few incentives for any party in the insurance industry to change habits.

Indeed, one of the cost savings measures includes the contentious issue of end-of-life counseling and palliative care. The group maintained that it supports allowing patients to decide about end-of-life care, said Michael Chernew, professor of health care policy at Harvard.

He said the group overall made its recommendations based on how the market operates. “I think that very few health economists will argue that if left fully on its own, market principles will solve all of our problems,” Chernew said.