Summary of the Two Journal Articles
The article discusses strategies for cost control in health care services paying attention to the issue of continues innovation in medical science. Three groups are classified based on qualitative assessment of the potential influence on cost reduction.
The provider’s businesses being based on fee-for-service payments, the question is how payment reform should be introduced keeping the services as usual. Budget-based capitation is the most potent form of payment reform in which providers receive fixed amount for all health services of a population of patients. New technology and new drugs should have strengthened effectiveness reviews. This would help in cost reduction. Health care systems including electronic methods enjoy political support and have potential for cost containment. If the chronic patients are taken care of more, that would lessen the chances of hospitalization. Thus, the cost could be reduced.
Heath care costs are concentrated on the period just before the patient’s death. Medicare data from Oregon indicates that this cost can be reduced without compromising the care. But this requires deep cultural change. Consumerism is an effective way of introducing cost cuts in health care services.
Also, the political left which advocates of single-player approach argues that employer-based commercial insurance system if eliminated, the cost of administration would reduce. There is widespread interest in reducing administrative costs by pursuing standardization of claims-payment system of private insurers.
Malpractice and drug-pricing reform are ways of cost reduction, though not too substantial. Also, enhanced primary prevention efforts would lead to general health benefits.
If other forms of reduction fail, as per the suggestion of the political left, fixed and all-payer budget ceilings for health expenditures would be helpful for the cause. The political right suggests indirect rationing by limiting Medicare and Medicaid payment for new services.
A Systemic Approach to Containing Health Care Spending
Solutions are required to reduce costs for both public payers and private payers. The Center for American Progress convened experts to come up with such solutions. The following solutions can be implemented separately or in an integrated package.
Since each provider goes through a process of rate negotiation with multiple insurers, there are excessive administrative costs. Continued consolidation of market power among the providers is bound to increase the cost. The self-regulatory model suggests a binding rate for public and private payers in a state.
The privately negotiated rates need to adhere to global spending targets for public and private players in the state. The payments should be transparent and determined through competitive bidding process.
Fixed amounts could be paid to the physicians and hospitals by the patients for all the cares or collective services that are provided. In the span of a decade, Medicaid and Medicare should base 75 percent of payments at least in every region on modes of alternatives to the fee-for-service mode.
Manufacturers and suppliers should compete among themselves under the influence of market forces so that the lowest price can be offered. This process would reduce cost as in the case of Medicare. This process should be expanded nationwide.
When authentic quality-reporting systems come to existence and the exchanges reach adequate scale, the federal states need to engage in active purchasing. This would enhance their bargaining power to secure best premium rates. This would also promote reforms in payment and delivery systems.
A task force consisting of providers, payers and vendors should set binding compliance targets and monitor use rate. The team should have broad authority to implement additional measures to achieve system-wise savings of $30 billion a year.
Price transparency would allow consumers to plan ahead and choose low-cost providers, thus leading high cost providers to make the prices low. Gag clauses and anti-competitive clauses must be prohibited. The data on the claims and prices need to be publicly reported after collection and auditing by the state insurance commissioners and exchanges.
Making greater use of these providers would enhance the workforce supply. That would increase competition and thus decrease the cost.
Physicians self-refer patients to obtain profit from the pathological services. As such, the Stalk Law should be extended in this direction to stop this occurrence.
FEHBP should align with Medicare and work to reduce payments to hospitals with high rates of readmissions and adjust payments to physicians and hospitals judging their performances.
Strategies which can control costs related to defensive medicine and medical malpractice must be responsible and active.
