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Bipartisan Policy Center Poised to Provide Analysis in Upcoming Deficit Debates

By Rebecca Adams, CQ HealthBeat Associate Editor

September 21, 2012 -- The Bipartisan Policy Center is positioning itself to be a major player in upcoming debates over containing health care costs that might emerge in Congress as lawmakers try to rein in the deficit. A new report marks the first step in its health care cost initiative funded in part by the Robert Wood Johnson Foundation and the Peter G. Peterson Foundation.

The organization is gathering information from the Centers for Medicare and Medicaid Services (CMS), such as Medicare and Medicaid claims data, to inform a significant upcoming report that will include recommendations to Congress. BPC officials also are asking private health insurers and health systems for data. The group hopes to use the information to draw conclusions about how best to lower costs.

BPC Senior Vice President and former GOP Senate aide Bill Hoagland, who recently began working at the center, told CQ HealthBeat earlier this month that a major proposal will be released by early next year. Hoagland said then that while he isn't embracing a premium support approach to control health care costs, nor endorsing the 2010 health overhaul law, there are elements of both that can be combined to tackle rising costs.

The 27-page white paper provides an overview of the major cost drivers in the U.S. health care system. It specifically mentions several issues including health care financing and delivery, the needs of an aging population, advancing medical technology, insurance design, the lack of transparency in cost and quality information, consolidation of insurance companies and medical providers, the tax treatment of insurance and the effects of a long list of laws and regulations.

Policies could curb spending growth tied to some of the issues, the report said, but others such as the aging population cannot be solved by policy changes. Some federal policies are needed, the report said, while others are in the purview of the states.

The health care law (PL 111-148, PL 111-152) will "help control costs," the report said, but it says the measure does not go far enough. "Multiple policy changes, developed with a broad bipartisan approach, will be necessary to address our health care cost growth challenges," the report says.

Among the wide range of factors affecting spending growth are:

  • The current fee-for-service system prevalent in the United States incentivizes medical providers to perform more tests and procedures, and the cost is masked by third-party insurance, the report said.
  • Administrative costs, due to the need for providers to bill different payers, are estimated to be between $156 billion and $183 billion per year.
  • Consolidation of hospitals in the 1990s is believed to have raised prices by at least five percent, the report said.
  • Fraud and waste cost Medicare and Medicaid at least $50 billion to $100 billion per year.
  • Prices in the U.S. are higher than in other nations, with per capita spending on physician services reaching $1,599 in 2008, compared to $310 per person in other developed countries.


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