Now that government spending increases are trending down, it’s an opportune time to tackle healthcare costs

Where There’s a Will There’s A Way

Now that President Obama has bent the spending curve, reversing the spending increases of the former administration, the time has come to address healthcare spending, without making unnecessary cuts to Medicare and other social program beneficiaries. Serious economists have pointed out that there is actually no need for such benefit cuts, and the core  U.S. economic issue isn’t spending, at all, but income inequality.

Now, a study by the  nonpartisan Commonwealth Fund, titled Confronting Costs: Stabilizing U.S. Health Spending While Moving Toward a High Performance Health Care System, finds that the $2.8 trillion U.S. healthcare system can be held to an annual spending target without spending cuts to Medicare, Medicaid, and other government programs by implementing measures to encourage providers to accelerate adoption of more cost-effective care.

The results would be that families, employers and government budgets would receive  relief from their growing financial healthcare burdens.

Commonwealth Fund President Dr. David Blumenthal believes the approach could win bipartisan support in upcoming deficit talks as a more politically acceptable alternative to cutting popular entitlement programs including Medicare.

There is an urgent need for such measures:

  • The United States has the world’s most expensive healthcare system.
  • Government forecasters say it will cost more than $9,200 this year person.
  • Costs continue to outpace inflation and restrain overall economic growth.
  • Americans die earlier and experience higher rates of disease than people in other countries.

Efficiency, Not Benefit Cuts

Although deficit hawks are attempting to turn the discussion to entitlement program cuts, the Commonwealth Fund study finds that benefit cuts are neither necessary nor inevitable. Instead, the study calls for the federal government to set gross domestic product per capita as a target for overall healthcare spending growth. According to the U.S. Centers for Medicare and Medicaid Services.In 2007, before the current slump in growth, healthcare spending rose 7.6% vs. GDP per capita growth of only 4.1 percent.

It’s Not Brain Surgery

‘The Commonwealth Fund study notes that changes that are already taking place could be accelerated, including financial rewards for physicians and hospitals that participate in coordinated team-based treatment strategies. The benefits for It Medicare’s 50 million beneficiaries would include:

  • Better protections against catastrophic illness.
  •  Incentives aimed at better outcomes for lower costs than under the current fee-for-service structure.
  • Freeing up resources for physicians and hospitals by reducing administrative costs.
  • Permanent elimination of a Medicare pay cut for physicians that Congress has repeatedly delayed.
  • And, of course, healthcare savings.

The report estimates that its recommendations could save $1 trillion on healthcare spending over 10 years. Savings would include:

  •  $242 billion savings for state and local governments.
  • $189 billion fom employers.
  • $537 billion for consumers.

Inevitable Change

In other words, not only isn’t it brain science, it’s a no-brainer. Of course, recommendations of this kind were originally included in the Affordable Care Act (ACA, or “Obamacare”) , but politicized as “death panels.”  There is certainly no doubt that cost reforms are needed, and now that the health care reform barrier has been breached and the ACA has created a platform for reform,  progress is inevitable.