Why Big Reform Should And Could Happen In 2009

costcontainment.jpgIn a post titled ‘Why big reform won’t happen in 2009,’ Joe Paduda of Managed Care Matters responds to our argument that the economic crisis demands health care reform. While recognizing, to some degree, that Congress cannot help American families or address the economic woes “in a lasting, meaningful way without health care reform,” Paduda argues that a lack of cost containment measures render comprehensive health care reform unaffordable:

While I applaud their motives, perspective and logic, I would also note that their piece completely misses the big point, a point they themselves explicitly acknowledge. None of the health care reform initiatives presently before Congress (except for the Wyden-Bennett bill), nor President-elect Obama’s health reform platform address costs.

A recent analysis of Barack Obama’s proposal by PricewaterhouseCoopers’ Health Research Institute priced Obama’s plan at $75 billion a year, with over one-third of the costs coming from existing funding for the uninsured. The group did agree with Paduda, noting “unless successful cost containment strategies were put into place, growing health care costs will increase the costs of Obama’s plan.”

Fortunately, Obama did not leave cost contain containment out of his proposal. In fact, just this summer CAPAF released an analysis of Obama’s cost-containment strategies. The report recognized that while universal health care reform would require an upfront investment in coverage and health care infrastructure, Obama’s containment measures would also help bring down health care costs and make covering all Americans more affordable.

Here are the specifics:

Expanding Access Contains Costs: By extending coverage to all, Obama can achieve efficiencies, end cost shifting and rationalize
financing mechanisms. As Bookings Institute economist Henry Aaron points out, broadly expanding coverage is “a precondition for effective measures to limit overall health care spending.”

Harness Market Power of Group Purchasing: Through Obama’s proposed insurance exchanges, small purchasers and individuals achieve greater clout vis a vis insurance companies. Small purchasers would enjoy greater choice of health plans, greater choice of provider networks, and lower premiums than they experience today.

Emphasize Prevention: While the United States spent $132 billion in 2002 treating Americans with diabetes, just $70 billion went to the prevention of all diseases. It can be difficult to quantify the possible savings from expanded prevention efforts, but experts estimate that just ensuring that every child receives every routine vaccination could reduce direct and indirect health care costs by up to $40 billion over time.

Improve Information On Effective Treatments: Today, Americans are likely to receive the appropriate care just half of the time, and approximately one-third of individuals seeking care are likely to experience a medical error such as a medication mistake or the wrong lab results. Improving quality could help save lives and contain costs. Estimates of savings go as high as 150,000 lives and $100 billion every year.

Greater Use Of Information Technology: Less than 25 percent of hospitals, and less than 20 percent of doctor’s offices, employ health information technology systems. Estimates vary, and real-life experience is limited, but one group of researchers finds that implementing health IT would result in mean annual savings of $40 billion over a 15-year period.

Better Management Of Chronic Disease: Treating the 90 million Americans with chronic conditions costs about $1.2 trillion a year, or approximately two-thirds of national health care spending. Better care for individuals with these conditions can translate into substantial savings. If every diabetes patient received the appropriate primary care for their condition, for instance, then national health care spending would fall by $2.5 billion.