Required Reading
Sensible ideas on health-care reform from the Brookings Institution

Sunday, September 6, 2009

THE DISCUSSION about health-care reform has featured a lot of talk about "bending the curve" of rising health care costs without a lot of detail about how. A useful new study from the Brookings Institution's Engelberg Center for Health Reform helps fill that gap. The report, "Bending the Curve: Effective Steps to Address Long-Term Health Care Spending Growth," is the product of 10 health-care experts who span the political spectrum, from Mark McClellan, who headed the Medicare program under President George W. Bush, to Harvard economist David Cutler, a health-care adviser to numerous Democratic politicians, including President Bill Clinton and candidate Barack Obama.

The group's essential and unsurprising conclusion is that existing mechanisms for purchasing and delivering health care are fundamentally flawed. Individuals don't have the correct incentives -- or even adequate information -- to reduce costs. Insurance companies make money by managing risk -- cherry-picking the healthiest enrollees -- rather than by competing on value. Doctors, hospitals and other health providers are paid based on the quantity of services they provide rather than the quality of care they deliver.

Thus, the group endorses changes such as raising the tax on sweetened beverages to target obesity and offering premium rebates to customers who improve their health or eliminate risk factors. It argues for capping the amount of health insurance that employers can provide tax-free, "to encourage carriers to design and workers to choose more cost-effective coverage." It proposes overhauling Medicare payment practices to reward performance and promote preventive care, and it endorses an entity that could propose fast-track policy changes for Medicare and Medicaid.

Some of its suggestions are part of the pending legislative proposals, but too much has been left out or watered down. Among the more intriguing ideas is a thoughtful approach to malpractice reform: The group suggests creating "health courts with specialized expertise in medical liability"; shielding providers from lawsuits if they adhere to "evidence-based guidelines"; and establishing "a legal pathway for early communication, apology and compensation."

In addition, the group proposes a far more fundamental shift in Medicare than do any of the legislative proposals. It would impose differing levels of co-payments depending on the service; for example, those deemed of high value might require no contribution from the patient while services determined to be of lesser health benefit might carry high co-payments. And it would reform supplemental Medicare insurance to eliminate "first-dollar coverage," under which seniors have no incentive to limit the amount of care they obtain.

As lawmakers return to work on health reform, this report should be required reading, lest the imperative for making long-term changes in health insurance and delivery gets left behind in the political scramble.

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