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REFORM: From Magic Bullets To Silver BBs: Getting Serious About Cost Containment



March 21st, 2007

Hope and weariness rise together in the hearts of the faithful as the 2008 election season begins, with de-escalation in Iraq open for debate and a barrage of serious-looking health insurance expansion proposals reverberating on the domestic policy front. In a culture of consumer gratification, it will be risky for politicians to raise the issue of cost control as the bidding on coverage progresses. But without a coherent strategy to restrain spending, universal coverage may represent an impractical quest to buy the nation into a system it really can’t afford.

Or such is the message of a new, devoutly bipartisan collection of essays from the Brookings Institution, Restoring Fiscal Sanity 2007: The Health Spending Challenge. The Clinton administration’s reform plan failed precisely because it attempted to fund expansions by reining in spending on those already insured, according to a chapter written jointly by Judith Feder, who served in the U.S. Department of Health and Human Services (HHS) under Clinton, and Don Moran, who worked in Ronald Reagan’s Office of Management and Budget (OMB). “Reluctance to disrupt Americans who have health insurance,” they write, “has inhibited most politicians.”

Pelosi’s health adviser on the budget. The budget debate currently picking up steam on Capitol Hill can curb public spending. But cutting Medicaid or increasing consumer cost sharing only shift costs onto new payers, observed House Speaker Nancy Pelosi’s chief health adviser, Wendell Primus, at a March 19 briefing on the new book.

Many promising strategies for tackling costs are on the table, Primus said, but none offer a big-bang solution, and most are not well enough developed for widespread implementation. “That’s why you can’t just sit a bunch of members [of Congress] around a conference table” to start making policy decisions now, he said. “We’re not ready.”

Real opportunities. Instead, an effort is needed “to grow a political center” large enough to overcome polarization and to proceed with a broad array of cost containment strategies in tandem. Authors in the Brookings volume seemed to agree on some of the most promising tools. They include research on the comparative effectiveness of treatment alternatives; experimentation with bundled payments for treatment episodes, rather than unconstrained fee-for-service payments that drive up volume; disease management; chronic care coordination; pay-for-performance; health information technology; and gain-sharing arrangements for physicians who manage costs effectively. None of them is a magic bullet, said coeditor Joe Antos of the American Enterprise Institute. But “there are real opportunities for system improvement,” he said. “Silver BBs.” 

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1 Trackback for “REFORM: From Magic Bullets To Silver BBs: Getting Serious About Cost Containment”

  1. University Update
    March 21st, 2007 at 12:26 pm

1 Response to “REFORM: From Magic Bullets To Silver BBs: Getting Serious About Cost Containment”

  1. Brad Kirkman-Liff Says:

    I disagree with the assertion that while many promising strategies for tackling costs are on the table, “most are not well enough developed for widespread implementation”

    If we look to the European health care systems, especially the British, Swedish, French, Dutch, and German systems, they have implemented research on the comparative effectiveness of treatment alternatives; experimentws with bundled payments for treatment episodes; adapted disease management and chronic care coordination to a variety of different models, conducted different forms of pay-for-performance trials, and have gone further than the USA in investing in health information technology.

    The greater problem is political. Cost containent means revenue reduction. One person’s costs are another person’s revenues. This has been a fundamental issue in health policy that has been commented on for the past 35 years, and applies to these silver BBs.

    Comparative effectiveness of treatment alternatives identifies which treatments are more cost-effective than other treatments. However, such comparasions can threaten the income of providers. Did not a group of surgeons attempt to have one government program defunded because of research that showed that surgery for low-back pain was not more effective than other lower-cost treatments? Was not the mission of that agency revised to prohibit similar kinds of studies of comparative effectiveness of treatment alternatives?

    Experimentws with bundled payments for treatment episodes: While DRGs have been in place for over 20 years years, we still have a system unlike the DRG systems in England, Germany and Holland where the physician payment is combined with the hospital payment. How can we expect hospitals and physicians to collaborate in effectively managing resoruces and quality as we continue the organizational seperation of the physician and the hospital.

    Disease management and chronic care coordination: Not all pharmaceuticals work equallyeffectivelly for all patients. Paients need to be givern accurate and factual information as to the benefits and risks of different treatment options, without hidden rebates or promotions influencing ther prescribing decisions of physicians or the selection decisions of the prescription benefit manager. Disease management must move beyond asthma and diabetes and address obesity or metabolic syndrome, a much more diffcult issue. Chronic care coordination neeeds to look at return-to-work issues and rehabilitation issues. European systems which have more comprehensive social service structures have innovative solutions which we have been ignoring for too long.

    Heah information technology has an incredible potential. Unfortunately, our current systems are so poorly designed and maintained that insurers and claim processors cannot even keep track of which physicians are contracted on a plan, when laboratories cannot send out duplicate copies of laboratory results to multiple physicians, when patients have to physicially walk the corridors of institutions and gather videotapes, radiology films, CDs and copies of charts to assure that they are delivered to the next provider. The use of “smart card” in France or the NHS “Spine” in the UK means that other nations are rapidly outdisttancing the US in their US of health information technology.

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