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Cutting Health Care Costs: Leading Experts Propose Bold Solutions

Cutting Health Care Costs: Leading Experts Propose Bold Solutions

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The Center for American Progress convened leading health policy experts to develop bold and innovative solutions to contain health care costs.
The Center for American Progress convened leading health policy experts to develop bold and innovative solutions to contain health care costs.

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Published by: Center for American Progress on Aug 01, 2012
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1Center or American Progress | Cutting Health Care Costs
Cutting Health Care Costs
Leading Experts Propose Bold Solutions
Te Aordable Care Ac is he mos ar-reaching eor o conain healh care coss odae. Te new law includes an array o reorms o he way healh care is paid or anddelivered—reorms ha reward he value and qualiy o care, no jus he quaniy o care. Tese signals o healh care providers are already caalyzing change hroughou hehealh care sysem.Bu healh care coss remain a major challenge. Naional healh spending is projeced oconinue o grow aser han he economy, increasing rom 18 percen o he economy oabou 25 percen by 2037.
Even wih he new law, ederal healh spending is projecedo increase rom 25 percen o oal ederal spending o abou 40 percen by 2037.
Teserends could squeeze ou criical invesmens in educaion and inrasrucure, conribueo unsusainable deb levels, and consrain wage increases or middle-class workers.Te Cener or American Progress convened leading healh policy expers—includingcurren and ormer ederal and sae ocials, execuives o healh insurers and hospialsysems, physicians, and economiss—o develop bold and innovaive soluions o con-ain healh care coss. Tese are heir recommendaions.
A systemic approach
Reorms ha simply shi ederal spending o individuals, employers, and saes ail oaddress he problem—and would ulimaely lead many people o orgo necessary care. Teonly susainable soluion is o conrol overall growh in healh care coss. Te ollowing solu-ions are designed o reduce overall healh care spending or boh public and privae payers.
Promote privately negotiated payment rates within global spending targets
Payers and providers should negoiae paymen raes ha would be binding or allpayers and providers in a sae. Te privaely negoiaed raes would have o  wihin aglobal spending arge or boh public and privae payers in he sae.
 Accelerate use of alternatives to fee-for-service paymen
Insead o paying a ee or each service, physicians and hospials should receive a xedamoun or a bundle o services (also called bundled paymens) or or all he care a
2Center or American Progress | Cutting Health Care Costs
paien needs (known as global paymens). Payers mus accelerae use o such alerna-ive paymen mehods. Wihin 10 years, Medicare and Medicaid should base a leas 75percen o paymens on alernaives o ee-or-service paymen.
Use competitive bidding for all health care commodities
Insead o he governmen seting prices or healh care commodiies, manuacurersand suppliers should compee o oer he lowes price. Medicare should immediaely expand such compeiive bidding naionwide—and exend i o medical devices, labora-ory ess, and all oher commodiies. Medicares marke-based prices should hen beexended o all ederal healh programs.
Require exchanges to offer tiered plans
iered insurance plans designae a ier o providers wih high qualiy and low coss, andreduce cos-sharing or paiens who choose hese high-value providers. Exchanges—markeplaces or insurance creaed by he healh reorm law—should oer a leas oneiered plan wih a premium discoun o 10 percen or more.
Require all exchanges to be active purchasers
Boh ederal and sae exchanges should engage in “acive purchasing”—leveraging heir bargaining power o secure he bes premium raes and promoe reorms ha provide beter care a lower cos.
Simplify administrative systems
Payers and providers should elecronically exchange eligibiliy, claims, and oher admin-israive inormaion. A askorce o payers and providers should se binding compliancearges, monior use raes, and have broad auhoriy o implemen addiional measureso achieve sysemwide savings o $30 billion a year.
Require full price transparency 
I is common sense ha consumers should know how much somehing coss beorereamen. All privae insurers and saes should provide price inormaion ha refecsnegoiaed discouns wih specic providers.
Empower nonphysician providers
Resricive sae laws preven nonphysician providers such as advanced-pracice nursesrom pracicing o he ull exen o heir raining. Making greaer use o hese providers would expand he workorce supply, which would increase compeiion and lower prices.
Prohibit physician self-referrals
Many sudies show ha when physicians reer paiens o aciliies in which hey have anancial ineres, hey drive up coss and may negaively aec he qualiy o care. Suchphysician sel-reerrals should be sricly prohibied.
3Center or American Progress | Cutting Health Care Costs
Leverage the Federal Employees Health Benefits Program to drive reform
Te program should require paricipaing healh plans o reorm heir paymen anddelivery sysems—including a ransiion o alernaives o ee-or-service paymen.
Reduce the costs of defensive medicine
Under a “sae harbor,” physicians would be presumed o have no liabiliy or medicalmalpracice i hey adhere o evidence-based clinical pracice guidelines and use quali-ed healh inormaion echnology.
What the experts are saying
“Te Aordable Care Ac was he rs generaion o reorms o ackle cos growh.Tese ideas are he nex generaion. Tey provide a roadmap o make America morecompeiive in he global economy because as we lower healh care coss, we lower hecoss o hiring new workers.”
— Neera Tanden, J.D., President, Center for American Progress
 “Ever rising healh care coss reduce middle-class amilies’ ake-home pay and hreaen America’s sanding in he world. Tese proposals would build on he healh reorm lao dramaically improve our healh care sysem. As Congress looks o cu he bud-ge—and healh care spending in paricular—hese proposals oer a roadmap ha canransorm he sysem and produce subsanial savings.”
— Ezekiel Emanuel, M.D., Ph.D., Senior Fellow, Center for American Progress
“Rising healh care coss pose a direc hrea o workers’ ake-home pay, he ederal budge, and sae governmen nances. Te key quesion is how we can coninue herecen deceleraion in healh coss. Tese ideas—rom expanding bundled paymens oan innovaive malpracice reorm—represen a promising approach o moving oward ahigher-value healh care sysem.”
— Peter Orszag, vice president, Citigroup, Inc.; former director, Office of Managementand Budget
“I is boh imporan and compleely easible o reduce healh care coss wihou any harm whasoever o paiens. Indeed, improvemen o care is by ar he bes sraegy ormaking care aordable. Tese ideas oer many helpul seps oward ha goal.”
— Donald Berwick, Senior Fellow, Center for American Progress and Harvard MedicalSchool; former administrator, Centers for Medicare and Medicaid Services
“Tis se o proposals oers a real way orward, away rom he sale debaes ha haveconsumed so much o policymaking.”
— David Cutler, Senior Fellow, Center for American Progress; Otto Eckstein professorof applied economics, Harvard University

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