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Report: Requiring Coverage, Changing Payments Would Lower Costs and Increase Coverage

By Will Matthews, CQ Staff


February 19, 2009 -- A health system that includes an individual coverage mandate, a mix of public and private insurance and a shift away from the current fee-for-service system would slow U.S. health spending growth by $3 trillion and achieve nearly universal coverage by 2020, according to a report released Thursday by the Commonwealth Fund Commission on a High Performance Health System.


Under the Commonwealth plan, all individuals would be required to have coverage, either from private insurance or a newly created public plan, and all employers would be required to provide coverage or pay into a trust fund.

The public option, with premiums as much as 20 percent lower than currently charged by private plans, would "challenge private insurers to innovate and reduce administrative costs," according to the Commonwealth report, which was based on policy specifics developed by The Commonwealth Fund Commission and evaluated by the Lewin Group.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, which represents health insurers, said his group agrees that changes to the health care system should improve access, reward quality and "get costs under control." But, he said, an "appropriate balance" needs to be found between public and private systems.

"It's important to consider the impact that lower payments will have on providers," he said.

The Commonwealth plan would shift from the current payment system, which pays per service performed, to more 'bundled' method of payment that would encourage more coordinated care and hold providers accountable for the results.

The plan also calls for investment policies to increase the use of health information technology and creation of a center for comparative effectiveness research to help determine which medical procedures and treatments work best.

While health care spending would rise under the Commonwealth plan, it would do so at a slower rate. The report projected annual growth of 5.5 percent under the plan, compared with 6.7 percent under current conditions.

Commonwealth Fund President Karen Davis said the group's plan is consistent with approaches backed by President Obama and Senate Finance Chairman Max Baucus, D-Mont., but that it "makes some of the tough choices" on the details lawmakers will encounter as they hammer out the specifics.

The estimates are based on the assumption that all policies discussed in the report will be enacted as a group in 2010, with effects unfolding through 2020.

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