I do not think there's any one thing that will turn everything around. Rather, a range of new and better ideas will come along.

JONES: We've waited a long time to seriously address the cost issue. We've kidded ourselves for a long time about how much good we're doing and how much we're saving. Employers have kidded themselves, insurers have kidded themselves (and advertised about nonexistent savings), and the same can be said for government. It's been in all of our interest to act like we're more successful than we are. So we've waited a long time and now we're in desperate shape in terms of costs.

On the other hand, in this country we now have a set of ideas that are really pretty unique, particularly the development of vertically integrated health systems. Whether a little bit vertical or a lot vertical, these organizations have an advantage that we sense is very important. Namely, they may allow a lot more flexibility in deciding how we are going to organize services, who is going to provide them, and all of those fine-print definitions. I have a fear that we are going to rush down the cost-containment road, and someone asked earlier if rate setting is incompatible with competition between accountable health plans. Well there are some real incompatibilities. We decide we are going to set rates and try to control volume, and then we tell an accountable health plan that the way they can really save money is to channel their patients to certain hospitals and certain physicians, but incidentally the rates for that hospital have been determined based on their getting so many patients next year. So, if you switch too many from that hospital to this one, it's going to undermine that hospital's budget. Budgeting under rate setting is based on a certain number of patients using a certain hospital. If you end up sending patients somewhere else because you get a better quality or cost deal, you end up with real incompatibilities. At some point we as a society have to make a real and difficult choice.



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