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Health Law Can Cut Spending Growth but Other Steps Needed, Bipartisan Report Says

By John Reichard, CQ HealthBeat Editor

October 22, 2010 -- A new report by a bipartisan group of health policy analysts says the health care overhaul law creates "important opportunities" to lower growth in health care spending. But it also says other steps are needed, such as taxing high-premium health plans starting in 2014, not 2018 as is called for in the law.

The report, "Bending the Curve Through Health Reform Implementation," was released by the Engelberg Center for Health Reform at the Brookings Institution.

"While more should be done legislatively, the current reform legislation includes important opportunities that will require decisive steps in regulation and execution to fulfill their potential for curbing spending growth," the report said.

"Executing these steps will not be automatic or easy. Yet doing so can achieve a health care system based on evidence, meaningful choice, balance between regulation and market forces, and collaboration that will benefit patients and the economy," the report concludes.

The authors include Mark McClellan, director of the Engelberg Center and a former Bush White House health policy adviser, and Joseph Antos of the right-leaning American Enterprise Institute.

Other authors are identified more with Democratic administrations, such as Harvard economist David Cutler and Leonard Schaeffer, a former Wellpoint executive who served in the Carter administration.

The authors said three goals can be met within five years that will produce savings while improving quality. They include:

  • Speeding payment changes away from traditional volume-based payment systems to those that reward quality and efficiency.
  • Implementing health insurance exchanges and other insurance revisions in ways that "assure most Americans are rewarded with substantial savings when they choose plans that offer higher quality care at lower premiums.
  • Revising coverage so that most Americans can save money when they make decisions that improve their health and reduce costs.

"We believe these are feasible objectives with much progress possible even without further legislation," the report said. But additional congressional action is still needed to support consumers in making choices that reduce costs while improving health, it adds.

Getting Congress to approve the legislation they recommend would be challenging to say the least. Moving up the effective data of the premium tax would likely arouse the opposition of unions. Another recommendation to broaden the powers of the Independent Payment Advisory Board (IPAB) created by the law would unleash powerful opposition by hospitals.

The report says IPAB's mandate should be changed by law to assure that it "allows a broad range of payment reforms beyond reductions in payment rates for particular services."

Other recommendations might find broader agreement, such as changing co-payments in the traditional Medicare program so that Medicare beneficiaries get savings when they use higher-quality, lower-cost care.

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