Part One: An Inventory of Cost-Containment
The healthcare debates have focused on ways to expand coverage--by mandates, by a public option, and by various forms of subsidy. But the underlying problem remains one of affordability, and, specifically, how to bring efficiency to a healthcare system notorious for its inefficiency.
Few concrete solutions have emerged because the healthcare industry itself is not sure what to do--its economic model is the product of the bureaucratic reimbursement and regulatory framework that drives providers towards always doing more. Moreover, the Congressional Budget Office cannot "score" most proposed solutions because it is impossible to quantify with any precision the main drivers of inefficiency--for example, the fee-for-service delivery model, or the amount of defensive medicine--or to quantify the potential savings of changing the legal and reimbursement framework.
Cost-containment can be viewed through many perspectives, which often overlap--for example, ineffective chronic care can be viewed in part as a problem of fee-for-service reimbursement. But categories of waste and inefficiency can nonetheless be identified, which any reform package should attempt to address. Here they are:
1. Chronic care. Care for chronic illness--mainly diabetes and heart disease--accounts for roughly 75 percent of all healthcare costs. About half of this is attributable to obesity, smoking, and other bad habits. There are several potential ways of cutting these costs:
--First, create incentives and other programs for healthier lifestyles. Safeway offers its employees reductions in premiums for losing weight and quitting smoking.
--Second, change the model of care delivery, from fee-for-service to a capitated "medical home" (or "accountable care organization"), in which providers are paid so much per patient per year, with incentives to push patients towards healthier lifestyles and with pay-for-performance adjustments to reward providers who succeed. There was a discussion among leading experts at NewTalk.org. Much of this work requires the work of social workers, not expensive healthcare professionals. Most experts agree on the need to shift to a medical home model; there is less agreement on how to get there.
2. End-of-life care. Nearly one-third of Medicare's yearly expenditures are on patients in the last year of their lives. There is a wide disparity in care for terminal illness, especially for the elderly. Palliative care in a home or hospice setting is often the most humane solution, but many doctors feel compelled to try to "cure" old age with dramatic and expensive interventions. Sometimes these are driven by an insistent child, sometimes by fear of lawsuits, sometimes by medical self-interest. Professor Marshall Kapp and Dr. Diane Meier review some of these problems.