Saving $1T in Health Care Spending

The minds at the Brookings Institute have proposed a framework for health care reform that could possibly save $1 trillion over the two decades.

In “Bending the Curve: Person-Centered Health Care Reform: A Framework for Improving Care and Slowing Health Care Cost Growth,” the authors suggest that innovation toward personalized care is the best way to improve care and health while also slowing the growth of health care costs.

“The proposals are intended to be a comprehensive set of steps, implemented incrementally, that would add up to fundamental changes over time to support better care,” the authors wrote.

The main goal is simply to improve health through better care, which would save an estimated $300 billion over the next decade, according to Brookings. Furthermore, once all the proposed reforms are implemented, the nation could save $1 trillion over 20 years.

“These issues of health care quality and cost must be addressed,” according to the report’s summary. “If a clear framework like ours is not implemented, the alternative is likely to be continued reliance on short-term cost controls, including across-the-board cuts in payments like sequestration, or delays and restrictions in both needed coverage updates for vulnerable populations and new types of innovative care — perpetuating large gaps in quality of care.”

The Brookings report covers reforms for:

Medicare

Transition from fee for service to Medicare Comprehensive Care framework that ensures beneficiaries get high-quality, more coordinated care; provides new opportunities to save money, improves competition on overall cost and quality of Medicare Advantage; and aligns with similar proposals in Medicaid and private insurance.

Medicaid

Move from one-off waivers to standard process for states to implement reforms that reduce per capita cost growth while maintaining or improving quality of care.

Private health insurance markets

Key reforms include reliable comparative cost and quality information to inform health plan choices; subsidies for coverage based on income and health need; flexibility in the design of benefits and payments; and steps to ensure the insurance markets are stable and work for high-risk and vulnerable individuals.

Important regulations

Reduce administration costs through standardization; improve cost and quality transparency; promote effective antitrust enforcement; address outdated licensing barriers for effective and efficient care; encourage development of efficient liability systems; and enable state to implement other system-wide reforms.

“It is time for health care reform that does much more to support the movement toward the prevention-oriented, effective, and personalized care made possible by recent and coming technological innovations — thereby slowing spending growth without compromising access or quality of care,” the authors wrote. “Our report is about how to get there.

The savings

While the report predicts transition to Medicare Comprehensive Care won’t yield any savings from 2014 to 2018, the expectation is $120 billion in savings from 2019 to 2023. Plus, there should be an additional $100 billion in savings from other Medicare proposals. Medicaid’s total 10-year savings are $120 billion.

The proposed changes to private insurance markets and other system-wide reforms should yield between $230 billion and $260 billion.

See the full report.