Controlling U.S. Health Care Spending — Separating Promising from Unpromising Approaches
Source: New England Journal of Medicine

High U.S. health care spending has been characterized not only as a barrier to affordable insurance but also as the preeminent long-term threat to the economy and the competitiveness of American business. The current policy discussion in Congress does not address this problem. The search for government savings with which to fund coverage expansions makes public programs the main targets for spending reductions; opportunities for private-sector savings are left out of the equation. We think it is useful to consider the cost-control options available to both the public and the private sectors.

Although there is no consensus on what should be the target for reducing spending, constraining increases in health care spending to the rate of growth in the gross domestic product (GDP) — and so devoting a fixed share of national income to health care — offers a reasonable goal. To achieve this goal, spending on health care over the next decade would have to be reduced by 6.2% from the amount the Centers for Medicare and Medicaid Services estimates the country would otherwise spend. This proposed reduction provides a framework for evaluating the options now under consideration.

We recently produced quantitative estimates of the likely impact of 12 policy options for reducing health care spending in Massachusetts, and we have extrapolated from that work to produce estimates for the country as a whole. We identified 8 options that evidence suggests have the potential to reduce spending and are broadly applicable to the United States. For these options, we developed high and low estimates of cumulative cost savings over 10 years. The graph lists the options, ranked according to their savings potential, and shows the percentage change in spending that we estimate could be achieved if that policy alone were implemented. If our most optimistic assumptions are reasonable, health care spending can be reduced, but the lower-bound estimates are far more pessimistic, and the substantial spread between the two indicates that the effects are highly uncertain.

This entry was posted on Friday, November 27th, 2009 at 5:40 pm and is filed under Business and economics, Consumer issues, Government and politics, Health and healthcare, Health insurance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.