Monday, June 17, 2024
HomeHealthCost Containment Through Health Improvement – The Health Care Blog

Cost Containment Through Health Improvement – The Health Care Blog


The United States is in the midst of an ongoing, and still expanding, healthcare cost crisis. Even among people with health insurance, medical debt has become a persistent problem. Senior executives at nearly 90% of large companies believe that the cost of providing health benefits to employees will be unsustainable in the next 5 to 10 years. And the nonpartisan Congressional Budget Office (CBO) warns that expanding federal debt – driven largely by health care spending and compound interest payments – signals a major crisis looming. fiscal.

On this last point, it is true that respectable people have been predicting a fiscal collapse for many years. In 1988, Benjamin Friedman wrote that we face a Doomsday. Referring to the increase in federal debt, he said: “We are living well by accumulating our debt and selling our assets. “The United States has had a party and has left the bill to the future.”

Peter G. Peterson wrote a book in 1993 called Facing up: How to rescue the economy from crushing debt and restore the American dream. In it, he said that “runaway medical costs are the most important reason why federal spending and federal deficits have now become ‘uncontrollable.’”

Not everyone agreed that deficits and debt were problematic. In 2003, as Republicans sought new income tax cuts, Vice President Dick Cheney declared, “Reagan showed that deficits don’t matter.”

David Stockman was Ronald Reagan’s first budget director and one of the main architects of the Reagan Revolution: a plan to cut taxes and reduce the size and scope of government. he wrote in The triumph of politics that the Reagan Revolution failed because the administration had failed to control spending, leading to massive increases in the federal debt.

In 2013, Stockman wrote a book called The great deformation: The corruption of capitalism in the United States. He said that during the Great Recession, the Federal Reserve Bank had carried out “the largest wave of money printing in world history.” Between 2004 and 2012, 70 percent of the growing US debt was absorbed by central banks. He said that “the world’s central banks have been transformed into a global chain of monetary cockroach motels. The bonds came in, but they never came out.” He concluded that it was the easy money, which the Federal Reserve System had provided for decades, that was responsible for the “tearless deficits.” “American politicians… had basically died and gone to the tax haven.” They were able to spend money “without the inconvenience of taxes.” Both Democrats and Republicans have taken advantage of this change in reality.

In 2020, Stephanie Kelton wrote a book called The myth of deficit: Modern monetary theory and the birth of popular economics. In it, he called for a paradigm shift: since the United States has the ability to print its own money, we must recognize that federal spending is not financed by tax revenues or borrowed funds. Whenever the need is sufficiently pressing (for example, in the event of war), we can and do supply the money that is needed. The real deficit, he stated, is not the fiscal deficit, but the social needs that are not met. Regarding health care, “our failure to provide adequate insurance and care for all Americans is not because the government cannot “afford” to cover the cost.” What’s happening is that we are operating under the wrong budget paradigm.

Most importantly, though, Kelton wasn’t saying there’s a free lunch. She wrote: “The government may spend too much. The deficits may be too large. But the evidence of overspending is inflation, and most of the time deficits are too small, not too large.” This fits with David Stockman’s concerns about the lack of soundness of money. And it reflects concerns from the CBO, which has said a fiscal crisis would mean higher inflation rates and an erosion of confidence in the U.S. dollar.

Contain healthcare costs

If the CBO is to be believed, deficits and debt do matter. And although for many decades there have been “Cassandras” who say that the sky is about to fall, there may come a time when the need for cost containment becomes immediate and vital. (Some would say we’re already there.) Health care is the main driver of fiscal deficits and, in an emergency, would become the main target for budget savings.

In this context, cuts to Medicare and Medicaid become a central focus.

The CBO has said raising the Medicare eligibility age from 65 to 67 could be a good option. However, this would be a painful cut. When France recently raised its retirement age, police and protesters clashed in the streets of Paris. And in the United States, many have advocated moving in the opposite direction, such as lowering the eligibility age to 60 or establishing Medicare for all.

Invariably, people concerned about the national debt talk about the need to make “difficult decisions.” An entire section of Pete Peterson’s book is dedicated to “the decisions we must make.” However, as Kelton has observed: “anti-privilege groups love to congratulate themselves on their bravery. But there is nothing courageous about attacking programs for the elderly, the disabled and the poor.”

Some states are now implementing spending caps to contain cost growth. California is the largest of these and will include strict accountability measures. The state is moving toward 3% annual growth in spending over the next five years, compared to 5.2% growth in recent years. Providers (including hospitals, physician groups and health insurers) will have to submit spending data to show they are complying with the limit. However, the California Hospital Association has argued that if a similar limit had been applied in the last five years, “it would have drained $60 billion from the resources that hospitals use to care for patients, an amount that translates in a whopping 58,000 jobs in the healthcare sector.” lost.”

Many other healthcare cost containment strategies are currently being considered across the country, but pain is the common denominator (often for patients and frequently for powerful special interest groups).

A better solution

I have been thinking about this problem since I entered health policy 30 years ago and I believe I have identified a solution. There is a way to reduce costs that is a win-win for patients and buyers and avoids irritating special interest groups. It involves containing costs by improving health. I talk about this in a previous blog called The Sweet Spot of Healthcare Cost Containment. This strategy involves improving the health of patients and thus reducing the demand for healthcare services. Although it is similar to rationing, because it involves reductions in care, patients would be the ones who decide not to seek care (because they actually feel well). The challenge is to improve patient health in a way that does not eat up all the resulting savings.

In the 1990s and 2000s, disease management emerged as a strategy to improve the health of Medicaid beneficiaries with chronic illnesses. Patients with diabetes, asthma, congestive heart failure, and other chronic diseases would speak by phone with nurses who would advise them on how to improve their health (e.g., diet, exercise, and medication adherence). However, the results indicated that no cost savings were achieved.

More recently, digital health tools have emerged as a possible solution. For example, Livongo provides patients with diabetes access to blood glucose meters and 24/7 support from expert trainers when the devices indicate out-of-range readings. The Peterson Health Technology Institute (PHTI, which is connected to Peter G. Peterson) recently evaluated a number of digital tools for diabetes and found that they were not cost-effective. PHTI is now evaluating digital tools in other clinical areas, including mental health.

On the Sweet Spot blog, I describe a mood tracking device I created to monitor my own bipolar condition. It provided a feedback loop that helped me self-monitor and self-regulate. By using the digital device, I was able to significantly reduce my hospital’s utilization, resulting in direct savings of tens of thousands of dollars. The intervention itself was free. Since hospitalization is a bad outcome for both patients and buyers, avoiding hospitalization is a win-win solution. And since we are short of hospital beds anyway, this does not bother the providers.

I would like to develop this tool for use with other patients with depression, bipolar disorder, and schizoaffective disorder, but there are numerous barriers to entry. One is to demonstrate that the device works. In saying that the system reduced hospitalizations, I am basing it solely on an “N of 1” and my own historical record. I would argue that this method establishes a useful spending base as it is patient-centered and captures actual long-term patient outcomes. However, medical professionals and scientists in the field may not agree.

The question we face is this: If healthcare cost containment becomes an even more urgent need than it is today, will we be agile enough to meet the moment?

Ben Wheatley has 30 years of experience working in health policy with organizations such as AcademyHealth, the Institute of Medicine, Kaiser Permanente, and Health Affairs.



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