Center for American Progress

How Can We Achieve Critical Savings in the Health Care Arena?
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How Can We Achieve Critical Savings in the Health Care Arena?

We suggest that as the administration moves to implementation, the commission should support steps to test, evaluate, and effectively adopt aggressive efforts around payment reform

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Recently enacted health reform legislation contained a number of measures to reform the health care payment system to ensure greater efficiency while improving the quality of care. These reforms include: 

  • The bundling of payments to doctors for episodes of care, not the number of visits to doctors
  • Accountable care organizations that reward health care providers for their quality of care
  • Primary care medical homes to ensure effective preventative care
  • An independent payment advisory board to ensure the government gets what it pays for in Medicare and Medicaid

These innovations are all designed to change the incentives in the health care system toward rewarding quality over use and prevention over expensive care. Conservatives allege there will be no savings associated with these steps, and CBO assigned minimal savings to these reforms in part because there is not sufficient track record around them. Yet many health care experts argue that such steps can have dramatic savings.

CAP Senior Fellow David Cutler, for example, contends there are $600 billion in savings to be found over the long term through reforms like these. Indeed, heatlh care experts from across the political spectrum believe these initiatives hold significant promise for large-scale savings over the long term by moving a health care system plagued by fragmentation and overuse toward a more integrated, efficient system, with savings to the public and private sectors.

That’s why we suggest that as the administration moves to implementation, the commission should support steps to test, evaluate, and effectively adopt aggressive efforts around payment reform, and to promote partnership with the private sector to assure systemwide change in payment structures and incentives. Furthermore, as the recently enacted legislation moves forward in implementation, we will learn a great deal about the effectiveness of new methods of payment. As a result, we will be able to take additional steps in the legislative process.

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