5 Takeaways from Health Affairs' Briefing Health Spending: Tackling The Big Issues

The same week Amazon, Birkshire Hathaway, and JP Morgan announced their intention to get into the business of lowering the cost of healthcare, Health Affairs hosted a who’s who of health policy experts in D.C. on the topic of health spending. Expert presenters described the gravity of the spending in sum, and relative to other countries. Recognizing the U.S. spends more than other high-income countries and receive a relatively lower quality of healthcare in return--presenters identified sources of high costs and waste, misconceptions, current progress, and potential solutions. Here are five thoughts that struck me.

  1. Experts in the room agreed the Amazon, Berkshire Hathaway, and JP Morgan announcement is a bellweather event, in that bringing patient and employee perspectives into healthcare is a new trend. Talking to patients to figure out how to reduce costs while increasing quality, as Amazon proposes to do, is much needed, according to several speakers. How they will do this without any healthcare partners, one panelist remarked, will be interesting to watch.

  2. Big campaigns we have rallied around partly because we thought they would save money are often benefits to society but without the cost-savings, according to Amitabh Chandra from Harvard University. Examples include expanding the number of people with health insurance, delivery care coordination, prevention (see below), high-deductible plans (people end up pulling back on the wrong kind of healthcare services, such as their daily diabetes medication), and innovation.

  3. Public costs of healthcare are steadily rising, increasingly crowding out resources for other important budget line-tiems such as “discretionary spending” which includes education. One panelists asked, “what is the overall health impact of more spending on health and less on education?”

  4. Waste in healthcare is often referred to but rarely articulated in the public discourse. Here, presenters describe the problem of coverage for high-cost, low-value procedures and treatments as a key driver of cost (i.e. excess MRI scans, protons for prostate). Eliminating low value care has proven challenging for several reasons, including that some patients demand their coverage, and the financial disincentives to reduce their creation and use are missing. Partly for those reasons, the Choosing Wisely campaign, which panelists noted has done a great job of getting agreement from medical societies on how to define low-value care, is lacking in implementation and uptake.

  5. Progress in reducing low-value care is slow, but not for a lack of trying. Pay-for-performance programs have had mixed results, with much of the positive results due to coding changes rather than real health benefits. ACO’s demonstrate a modest 1-3% cost savings, and bundled payment models reduce costs by 2-3%. Panelists recommended expanding bundled payments and aligning them with patient-sided incentives for further progress, and then figuring out how to do much more to take a bigger bite out of the 30% of healthcare projected to be wasteful.

A note on prevention. Here is another example of how prevention and population health initiatives that keep people healthy are discussed as “a good thing to do, but….” In a world where we can’t ignore the cost of healthcare, how do we continue

to make the case for prevention? Recent cuts to the Prevention and Public Health Fund suggest it doesn’t seem to be enough of an argument that supporting prevention is the right thing to do, an the ROI data we have is not compelling enough. Given that some programs have better ROI than others, do we focus on pushing programs with an obvious ROI because something is better than nothing?

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