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Press Release

NEW REPORT: Efficiency and Quality

The Role of Controlling Health Care Cost Growth in Health Care Reform

By Paul B. Ginsburg, Ph.D. | June 15, 2009

Read the full report (pdf)

Download the executive summary (pdf)

WASHINGTON, DC—Expanding health insurance coverage to the millions of uninsured Americans is a key U.S. policy goal, but expanding coverage without steps to contain rapidly rising health care costs is a recipe for failure. For years, federal initiatives to reform health care focused mostly on expanding the proportion of Americans covered by health insurance. That is a key part of this year’s health reform agenda, but most policymakers recognize that provisions to address rising health care spending are an important component of health care reform.

President Obama and his budget director, Peter Orszag, continually stress the importance of lowering the trend of health spending increases. A consortium of key health care stakeholders responded by pledging to help reduce rising health care costs, with estimated savings of $2 trillion over 10 years.

Controlling costs and ensuring access to affordable coverage are inexorably intertwined. Over the past 30 years, the growth in health care spending has outpaced growth in our nation’s gross domestic product—the value of all goods and services produced in the U.S. economy—by more than 2 percentage points a year. Over time, the gap between health care cost growth and the nation’s wherewithal to pay its health care tab leads to more Americans losing health insurance and increased stress on federal and state budgets.

This paper focuses on steps that can be taken as part of health reform to slow the trend of health spending, including steps that Congress can take now, as well as direction for developing and implementing longer-term policies. Rather than attempt to treat the topic comprehensively, this paper will focus on five areas that appear to have the greatest potential:

  • Increasing the accuracy of the Medicare physician fee schedule
  • Developing payment systems that broaden the focus of physicians, hospitals, and other providers from delivering piecemeal, individual services to patients to providing the care patients need for an entire episode of illness or that an entire population needs
  • Encouraging and fostering use of Medicare’s provider-payment methods by private insurance companies and Medicaid, the joint state-federal health program for low-income people
  • Reforming the tax treatment of employer-based health benefits in a way that encourages employers to keep offering coverage but not excessively comprehensive benefits
  • Expanding comparative effectiveness research, with a particular emphasis on assessing technologies already in broad use
  • Each of these options has potential to help slow excessive health care spending growth and improve the overall quality of health care.

Read the full report (pdf)

Download the executive summary (pdf)