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Executive Summary
Without health care reform, the United States is projected to spend
over $40 trillion on health care in the next decade. Experts estimate
that thirty percent of that spending – up to $12 trillion dollars –
will be wasted on ineffective care, pointless red tape, and
counterproductive treatments that can actually harm patients.
As a result, American families and businesses are weighed down by
high premiums that continue to increase twice as fast as inflation.
Meanwhile, cost-benefit analyses performed by the Business Roundtable
show that, dollar for dollar, we get less for our health care spending
than the rest of the industrialized.
Health care reform holds out the golden promise of addressing both
of these problems at once. By aligning incentives within the health
care system in favor of quality treatment, by investing in health
information technology, and by conducting better research on which
treatments work for which kinds of patients, we can make health care
both more affordable and higher quality.
I. Streamlined Billing
Replacing the profusion of different forms and codes with a single,
uniform process, and connecting providers and payers in an electronic
network that does not rely on paper-based records, has been proven to
increase efficiency and decrease costs.
Net ten-year savings: up to $350 billion
II. Health IT
Almost alone among American industries, for the most part health
care has failed to integrate productivity-enhancing information
technology systems. Well-designed information technology systems can
help close information gaps and allow data sharing for better
coordination.
Net ten-year savings: $180 billion
III. Insurer Efficiency
Currently, insurers are not required to devote any fixed portion of
the premium dollars consumers pay to medical care. Requiring insurers
to spend at least 85 percent of premium dollars on actual health
benefits would create a firm incentive for insurers to prioritize
quality care and reduce wasteful inefficiencies.
Net ten-year savings: $100 billion, as a very rough estimate
IV. Comparative Effectiveness Research and Evidence-based Medicine
Due to a lack of easily available research on which drugs, devices,
and treatments are most effective for particular patients, unsuspecting
doctors sometimes prescribe ineffective or counterproductive
treatments. Adoption of the findings in evidence-based treatment
protocols and guidelines can help ensure we are paying for the most
effective treatments.
Net ten-year savings: up to $480 billion
V. Prescription Drug Advertising
Heavy marketing of prescription drugs raises health care costs and
fails to improve patient health. Pharmaceutical marketing encourages
patients to take drugs that cost them more and that often are riskier
than alternative medications. Restricting this marketing would allow
more prescriptions to be written based on unbiased science, reducing
costs and improving care.
Net ten-year savings: Savings on the very rough order of $210 billion appear possible
VI. Payment Reform and Prevention
Too often, patients do not receive the most effective care for their
illnesses. We systematically underinvest in the primary and preventive
care – including early treatment and screenings – that keep people
well, and when a patient enters a hospital or gets sick, many doctors
may treat him or her without strong coordination, leading to
duplicative tests, miscommunication, and needed care slipping through
the cracks. Creating financial incentives for proven treatment
strategies, including managing chronic diseases, would lead to more
primary care and better coordination – and lowered costs.
Net ten-year savings: ~$1.1 trillion
VII. Health Insurance Option
One of the most high-profile elements of proposed health care reform
is the establishment of a new public health insurance option, open to
those who are unhappy with their private coverage. This option would
expand consumer choice, but it would also help bring down costs by
forcing private insurers to be more competitive.
Net ten-year savings: $230 to $320 billion
VII. Ending Government Overpayments to Insurers and Drug Companies
Currently, a pair of federal government policies enrich insurance
and drug companies at taxpayer expense, overpaying insurance middlemen
and drug manufacturers. Eliminating these backdoor subsidies would
save taxpayer dollars and make government programs more efficient.
Net ten-year savings: $93 billion
Conclusion
Ultimately, the reforms discussed above can save roughly $3 trillion
over the next decade. And health care reform can also save billions of
dollars in every state of the union, opening up the possibility of
increased private and public investment, higher job growth, and
increased savings.
The question, critical to the health and economic well-being of all
Americans, is whether Congress will push for strong measures to bring
down costs, or will instead settle for more modest reforms. So far,
the impact on the federal balance sheet is front and center in the
current health care debate.
But just as most health care spending falls on the backs of
families, businesses, and state governments, so too do the benefits of
potential savings. Leveraging federal investment into system-wide
savings is the best way to get unsustainable premium hikes under
control – by fostering investment in health IT, by reorienting perverse
payment policies within public programs, by funding all-important
medical research.
Further, one of the clearest lessons of the last few years is that
the rise of health care costs is not a once-per-decade problem;
additional policies will need to be adopted as technological
breakthroughs occur and new research points the way to better modes of
treatment. To truly deliver on the promise of reducing health care
costs, Congress should adopt proposals that would foster continual
innovations to make care more affordable and effective, starting with
Medicare.
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