Health Reform Debate 2.0

In a post today Tyler Cowen offers 14 creative suggestions for alternatives to the versions of health reform in current legislation. I like some of his ideas, such as federalizing Medicaid, making “all-out attempts” at improving procedures to limit hospital deaths (hand washing!), increasing access to care via walk-in clinics staffed with nurses, paramedics, and pharmacists, and introducing price transparency, among others (read the whole thing–it isn’t long).

A few of Cowen’s ideas may decrease the per-encounter cost of care. Some could reduce costs overall if widely adopted (e.g. greater reliance on health savings accounts and catastrophic coverage coupled with greater price transparency). Broadly speaking, these ideas fit within the framework of the current debate in that they focus on coverage but not on payment reform. I believe it is the latter that will be health reform’s next battleground.

Any health reform passed this year (or next) is unlikely to include Cowen’s cost-related suggestions or any other serious measures to reduce costs. That’s why the current debate over health reform is just the beginning–call it Health Reform Debate 1.0 (beta). Debate 2.0 will be about costs, specifically about payment reform. There is a little bit in today’s health reform legislation that suggests the promise of “bending the cost curve” via payment reform, but there is nothing that gives me or others tremendous confidence that it will be bent much, if at all.

Dealing with health care costs can’t be avoided or kicked down the road very far. Medicare is already in horrible financial shape. Before the Obama presidency is over or in the next president’s first term something substantial will need to be done to resolve Medicare’s insolvency. Meanwhile, the cost of care, and coverage for it, is becoming an increasingly heavy load stone for states, businesses, and families. Debate 2.0 is nearly upon us, even as we struggle to resolve 1.0 (beta).

Therefore, I’d like to add a 15th item to Cowen’s list: payment reform that compensates providers, at least in part, on the basis of quality and cost control. That’s very vague. One can conjure up some specifics and some have. Few are thoroughly tested and none have been anywhere near the center of political debate. But they will, and soon.

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