Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Reining in Health Care Spending: Let Us Count the Ways

Although the most recent news on national health care spending was somewhat encouraging—spending growth in 2005 slowed to 6.9 percent, from 8.4 percent during the previous five-year period—expenditures nevertheless continue to outpace general inflation and growth in wages for the average U.S. worker. Health care expenditures, moreover, are expected to continue to rise rapidly over the next decade, imposing heavy stress on families, businesses, and public budgets.

But it doesn't have to be this way.

According to a recent analysis, Slowing the Growth of U.S. Health Care Expenditures: What Are the Options?, the U.S. should be able to achieve substantial savings and better value for its world-leading investment in health care. The report, prepared for the Commonwealth Fund Commission on a High Performance Health System, illuminates the factors contributing to high expenditures and examines strategies that have the potential to produce savings, slow spending growth, and improve health system performance.

IMPORTED: www_commonwealthfund_org__usr_img_reining_doubgraph.gif


Fund president Karen Davis and her coauthors suggest it is possible to achieve significant savings by redesigning current incentives. Within both the private and public sectors, she notes, there is a growing movement among health care purchasers to hold physicians and hospitals accountable for delivering care that conforms to recognized clinical guidelines. Whether they rely on financial incentives or the public reporting of provider performance data, these initiatives encourage the use of effective, efficient care practices, particularly for patients with acute conditions like heart attack, or chronic illnesses like high blood pressure.

Insurers that sell health plans with high deductibles, however, are working at cross-purposes. As many studies have shown, higher deductibles create disincentives for patients to visit the doctor for a cancer screening or to take steps to properly monitor and manage their diabetes or asthma.

That's why Davis believes current federal rules governing health savings accounts need to change. Essential primary and preventive care, she says, should be exempted from the large deductibles that are associated with such accounts, and cost-sharing should be reduced when patients use providers belonging to "high-value" networks. Federal policy could also encourage employer groups to experiment with health plan designs that waive copayments and other cost-sharing for chronically ill patients who participate in disease management programs.

The report discusses a number of other strategies for realizing savings and improving the performance of our health system. Helping physicians make better medical decisions, by giving them access to information on the full benefits, risks, and costs of new medical treatments and procedures, is one of them. Reducing the high administrative costs of health insurance, by pooling the individual and small-group markets or by offering a comprehensive Medicare plan, is another. Investing far more in primary care, health information technology, and insurance reforms that target access, affordability, and equity are also essential means to this end, the authors say.

"Fragmented policies that focus on one aspect of care or shift expenditures from one payer source to another" will not address the complex problems afflicting the U.S. health care system, the authors say. Only a "coherent public and private sector strategy," they contend, will ensure the nation achieves "commensurate value for the significant resources it commands."

Publication Details