Editor’s Note: In a paper in the recently released May/June issue of Health Affairs, Donald Berwick, John Whittington, and Tom Nolan of the Institute for Healthcare Improvement lay out a strategy for improving American health care through the pursuit of the “’Triple Aim’: improving the individual experience of care; improving the health of populations; and reducing the per capita costs of care for populations.” Today, the Health Affairs Blog presents commentaries on the Triple Aim paper by David Kindig and Cathy Schoen (below).
Berwick, Whittington, and Nolan will discuss their paper on a conference call today at noon, and IHI will hold a June 23-24 conference in Washington DC on achieving the Triple Aim. For free full-text access to the Triple Aim paper and to learn more about the IHI call and conference, visit the IHI Web site.
In their Health Affairs article, “The Triple Aim: Care, Health, and Cost,” Donald Berwick, Thomas Nolan, and John Whittington eloquently issue a call for strategic public and private policy action focused on the interrelated goals of improving patient care experiences, improving population health, and slowing the growth of health care costs. Their analysis of preconditions to improve simultaneously on all three fronts centers on the need for an “integrator” and for policies and financing that focus on improving population health within a high-value health care system. Early in the analysis, they state, “The Holy Grail of universal coverage in the United States may remain out of reach unless . . . we can reduce per capita costs.” From a whole-system and international perspective, the converse is likely the case: slowing the growth in costs and focusing on value critically depends on universal coverage with insurance reforms designed to support better care, continuity, and efficiency
Lack Of Leverage And A Whole-Population Perspective
At multiple levels, fragmented insurance, gaps in coverage, and insurance-market competitive dynamics are barriers to the pursuit of the Triple Aim. Currently, with the exception of Medicare, few insurance programs cover a sufficient share of the population to enable leverage to change payment incentives. Doctors face multiple fees and payment methods for the same care, and it is difficult to develop feedback systems on population health and cost outcomes over time. Indeed, even asking about long-term outcomes and total costs of care for episodes of care is a research project if one wants to profile an entire population in a geographic area. Churning of enrollment is also the norm: private insurance plans also typically see enrollees as “passing through,” undermining incentives to invest for the longer term.
Each insurance program, whether public or private, depends on clinicians and hospitals participating. Within any market, payment policies cannot significantly depart from current prevailing “market” rates and expect to maintain networks or protect enrollees from out-of-pocket expenses above plan “allowable” rates. Health care delivery remains local. Where specialists and hospital markets are concentrated and payers are fragmented, it is difficult to move incentives in new directions, much less hold systems accountable for total costs of care.
Health Risks And Insurance Market Competition
Competitive dynamics in insurance markets further undermine pursuit of the joint goals of better outcomes, positive patient experiences, and lower costs. For any given population group, health expenditures are highly concentrated in the top 1 to 10 percent of the population — with the top 10 percent accounting for 64 percent of total costs. Such higher-cost patients include those with serious acute illnesses (cancer, heart attack, hip fracture) and chronic diseases, including multiple conditions. Unlike the Netherlands and Germany, two countries that also have competing insurance entities, the U.S. lacks financing mechanisms to equalize health risks across plans and market rules that prevent premium variation based on expected health risks. In U.S. markets, health plans stand to gain or lose financially if they avoid or attract a disproportionate share of sicker patients: even one or two percentage points above “average” would be significant. Although large employer groups provide a mechanism to pool health risks, the potential remains for adverse selection where employers offer a choice of plans. As a result, competitive dynamics in the current market undermine incentives to compete on health outcomes. To the extent that a plan attracted a disproportionate share of patients with diabetes, heart disease, cancer, or back problems, its premium costs could be higher even if outcomes were better and costs, adjusted for risk, were lower. The lack of market rules, risk-equalization policies, and universal coverage enables competition, and provides incentives to compete, on health risk rather than better outcomes and cost performance.
Complexity And No Minimum Standard For Insurance
Without agreement on what constitutes adequate insurance, including scope of benefits and financial protection, plans can also lower premiums in group and individual markets by shifting costs to patients through higher deductibles, cost sharing, limits on benefits, or annual caps. The thinning of benefits provides an escape valve for major group purchasers by taking the focus off total costs of care throughout an episode of care.
Multiple variations in benefit designs increase complexity for patients and providers and add to insurance administrative costs that are already high by international standards because of enrollment churning, underwriting risks, and marketing costs. Not counting insurance-related costs within physician practices and hospitals, U.S. net insurance administrative costs have more than doubled since 2000, rising much faster than personal health care costs. The U.S. stands out internationally for high insurance administrative overhead as a share of national expenditures and per person.
Fragmentation Undermines Accountability
The failure to insure the entire population, pool risks, and put in place policies that might foster competitive dynamics based on outcomes and costs undermines efforts to develop payment incentives or methods in support of integrated care. Multiple payment methods and price levels for the same service and fractured risk pools further make it difficult to hold delivery systems accountable for achieving the Triple Aim. The choice is thus not whether to first control costs and then aim for the “Holy Grail” of universal coverage.
As the “Triple Aim” authors describe, health care delivery in the United States is fraught with fragmentation — at the national, state, local community, and practice levels. Doctors and hospitals practicing in the same community and caring for the same patients are not “connected” to each other, and we face a critical shortage of primary caregivers. Our current disjointed financing model — a mix of private insurers and public programs each with its own set of rules and payment methods — and growing number uninsured and underinsured people further “disconnect” the health care delivery system, contributing to waste and high administrative costs.
Universal Coverage: A Disruptive Innovation For The U.S.
The “Triple Aim” paper discusses disruptive innovations that can foment dynamic change. In the United States, well-designed universal coverage offers a potential disruptive innovation to trigger a new dynamic to move in positive health, care, and cost directions. In the May/June 2008 issue of Health Affairs, my coauthors Karen Davis and Sara Collins and I discuss a possible universal insurance framework that builds on the strengths of public and private group health insurance within a more connected insurance system. We discuss how such a “building blocks” approach with market reforms offers a transition with the potential of sparking a new competitive dynamic. If coupled with payment reforms and innovative information systems, creative insurance reform could generate momentum to more transformative health system change.
Berwick and colleagues conclude that moving in new directions will require the political will to focus on pursuit of the Triple Aim. They could add that the choice is not whether to focus first on costs and then coverage. Rather, it is how to insure the population with more integrated insurance AND put in place complementary policies to support and stimulate more coordinated, efficient care systems with better outcomes and more affordable costs. Businesses, families, and public sectors all face the same specter of ever-rising costs, variable quality, and eroding coverage. We need to come together to forge the political will to integrate insurance and care to reap the potential gains in population health and financial security.