Assessing Health Care Reform (1993) / Chapter Skim
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Containing Health Care Costs
Containing Health Care Costs
Pages 21-32
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From page 21... ...
High health care costs are also a major contributor to growing anxiety among He middle class about the adequacy and continued availability of their heady coverage. cosrs IN CONTExr To serve heady and access as well as cost containment objectives, policies to limit the rate of cost escalation need to be grounded in the concepts of: valu~how health care spending relates to the achievement of desired outcomes; affordability—how health care spending relates to individual and societal resources; and equity- how the financing and distribution of health services affects different groups.
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From page 22... ...
(For reviews of the literature on He imp act of cost containment strategies, see CBO, 1992a, 1992b; EBRI, 1991; TOM, 1989b, 1993b; fences and Schieber, 1991; Newhouse, 1992; Thorpe, 1992.) Moreover, although some individual committee members had strong philosophical views about managed competition and other relatively sweeping prescriptions for controlling health care costs, He committee did not reach consensus on such prescriptions as part of this particular effort.
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From page 23... ...
The next section considers some of the questions that would need to be resolved In moving from general to specific policies. Specific Elements The committee agreed that several specific elements should have a role in a strategy for health care reform.
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From page 24... ...
Implementation of Me above elements—particularly the first and second- should reduce some of Me strain placed on the heath care system by reducing Me demand for care. It should simultaneously encourage informed evaluation of health care options so Mat reductions in demand are focused on care of marginal value.
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From page 25... ...
The committee notes a strategy that is frequently promoted as a centerpiece of health care reform: Unmanaged competition." Most versions of this strategy call for a regulated system of competition among health plans that limit coverage to care provided by restricted networks of practitioners and providers, for example, staff-mode! heath maintenance organizations that rely on salaried physicians.
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From page 26... ...
A related discussion focuses on health worh~orce planning, in particular, the need to increase the proportion of primary care physicians who provide Me preventive, primary care, and gatekeeping services that many reform proposals emphasize as means of increasing efficiency In health care delivery. Clinical practice guidelines are also discussed later in this report as an element of strategies to improve quality of care.
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From page 27... ...
they would phase in certain components on a t~t-and-rense or compar~and~elect basis. A few over prominent questions that proposals for health care reform should address are discussed below.
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From page 28... ...
Tax Caps and Geographic Variations in Health Care Costs A uniform national cap on the tax exclusion for employer-paid health benefits would likely be too generous for low cost areas and a serious burden for many In high cost areas. The committee believes polic~makers should provide for geographic indexing of any tax cap, although it recognizes that this approach challenges He conventions of tax and benefit policy and could present significant technical and practical difficulties.
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From page 29... ...
Core and Supplemental Benefits In addition to provisions for patient cost-shar~ng, other decisions about the scope and kept of benefits will be strongly influenced by cost containment objectives. The committee has already recommended in its discussion of access Hat reform proposals should define a package of core benefits that health plans should cover and that proposals should allow consumers to purchase supplemental benefits under certain conditions.
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From page 30... ...
Risk Selection versus Cost Containment As noted In the section on access, a heals care reform proposal that relies on competition among health plans should discourage health plans from competing on the basis of risk selection rather than effective management of care and costs. To promote the latter and Cat the former, health care reform proposals should include provisions for standard benefit packages, risk-adjusted payments to health plans (but not nsk-adiusted individual premiums)
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From page 31... ...
The committee, however, agreed Hat several specific elements should have a role In a strategy for health care reform: Movement toward provider payment mesons that encourage efficiency and economy in He provision of hemp services as well as quality of care and good outcomes Some cost-sharing by most patients Better information on the price, quality, and expected outcomes of medical services.
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From page 32... ...
The key criterion for judging the appropriateness of administrative tasks and costs is whether Me costs they impose are justified by Be degree to which they serve desired objectives related to access, quality, equity, efficiency, and information. To discourage health plans from competing on the basis of risk selection rather than effective management of care and costs, reform proposals should include provisions for standard benefit packages, risk-adjusted payments to health plans (out not riskadjusted individual premiums)
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