In a study of men with heart disease, Cutler concluded that patients were paying an average of $10,000 for every year of extended life. Cutler thinks that's value for money.

His solution focuses instead on quality of care. "Rather than pay less, he wants to pay more wisely - to encourage health-care providers to do more of what they should and less of what is wasteful," the New York Times Magazine reported in 2005.

Universal Health Care

Cutler also wants to broaden the world of those with access to care. "Because so many people do not get care when they need it, we could spend more on those people with excellent results," he wrote in his book.

"He envisions a system in which everyone could get insurance while free-market incentives would motivate health-care providers to be more effective as well as more efficient. Instead of suppressing the market by rationing care, restraining prices or regulating doctors, he wants to liberate it," the New York Times reported.

Cutler's Twofold Plan: Vouchers and Incentives

Cutler's plan has two central pieces. First, he envisions the government offering universal health care, but providing tax credits to individuals who instead choose to get private insurance or care. The idea was adapted for Obama's health plan, which creates a federal health exchange that offers private insurance.

In 2005, Cutler proposed offering a $6,000 tax credit to poor families, with the amount of the credit decreasing on a sliding scale for those with larger incomes. The credit would be redeemable to spend on health care or insurance, representing a sort of health-care voucher.

Because everyone would be able to get a voucher, this program would cut the traditional tie between health insurance and employers. "Many employers, for competitive reasons, would still offer coverage, but access to care would no longer depend on either employment status or age," said the New York Times."Health insurance is not something that is made better by tying it to employment," Cutler wrote in Your Money or Your Life.

Second, Cutler's plan aims to improve quality and efficiency of care. He wants to restructure the way doctors and hospitals are paid, compensating these providers based on the caliber of their services. He believes this would make doctors and hospitals compete to offer the best care.

Cutler uses as an example the typical treatment for diabetics, who are at increased risk for blindness. Doctors often tell diabetics to get annual eye exams, but rarely follow-up to make sure the patient has done so. "Every doctor you talk to says: 'I know we don't do a good job on that. We don't get paid for it.' My way, we would pay them," he told the New York Times Magazine.

Cutler called his approach a "coordinated effort to focus the entire payment system around better health, not just more care" in a Wall Street Journal opinion piece. Cutler believes incentives to health-care providers will be especially useful in dealing with chronic illnesses such as obesity and diabetes, which are the types of long-term illnesses that most worry employers and insurers.

Criticism

Critics of Cutler's plan say it won't reduce health-care spending, which continues to grow exponentially.

During the 2008 campaign, GOP presidential nominee Sen. John McCain's (R-Ariz.) team criticized the Obama plan (of which Cutler is an architect) as too costly. Cutler responded by contending that cost-cutting initiatives are built into the Obama plan. He believes incentivizing doctors based on results rather than procedures will make care more efficient and less bloated; that using electronic medical records will reduce administrative costs; and that focusing on preventing disease will reduce costs in the future. "We estimate that the reforms Senator Obama has proposed will reduce medical spending by 8 percent, or about $2,500 for a typical family," he wrote in a rebuttal to the McCain team's criticism in the Health Affairs blog.

Technology

One of Cutler's biggest crusades is a push for routine use of electronic medical records. Cutler contends such records could not only cut down on administrative costs and reduce errors, they could also offer doctors valuable feedback on performance. "Cutler envisions a medical world in which doctors routinely get readouts of their patients' blood-pressure levels, insulin, smoking rates -- the lot.," The New York Times Magazine wrote. "This, of course, is how most of the business world already operates."

The Obama health-care plan includes $10 billion to help the medical industry adopt electronic medical record-keeping. Although Cutler has long-argued such an investment would prove extremely valuable, "many experts have been skeptical of this claim - not least among them, incoming Office of Management and Budget Director Peter Orszag," Jonathan Cohn wrote on a New Republic blog. "Cutler and Orszag share the same goals; both are absolutely committed to health-care reform. But they don't agree about how to read the data. So I'm sure they'll go a few rounds on that."

Mandates

Cutler does not support government mandates requiring Americans to obtain health-care coverage or face a fine. "The mandate argument is: You must buy something - but I'm not going to tell you what it is, how much it will cost, or where you're going to get it," Cutler told a health policy blog in December 2007.

Rationing

Experts say technology is one of the key factors driving health-care costs, creating increasingly innovative and expensive procedures. But Cutler is not a proponent of rationing; that is, cutting costs by limiting access to expensive procedures. He believes such a practice discourages medical innovation.

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