Prospective payment and bundling of payments offer the most promising means to contain healthcare costs, said David O. Meltzer, MD, PhD, who gave a rundown of the weaknesses and strengths of some of the proposed remedies to reel in healthcare costs in the postreform United States. He made these remarks during a special session on healthcare reform.
Economists believe that the single reason that healthcare costs are rising is the use of more technologies, and that the real price of quality-adjusted healthcare is actually falling, said Dr Meltzer, associate professor, department of medicine, Harris School, and department of economics, University of Chicago, IL.
Cost-effectiveness analysis could ensure that technologies are used appropriately. However, “the politics of rationing remain as toxic as they have always been.”
Other cost-control measures also are likely to be insufficient, he said. Savings from malpractice reform would amount to 2% to 5% at most. And although prevention is a valuable way to promote health, it usually does not reduce costs, Dr Meltzer indicated. “You know people aren’t really serious about cost control when they say that prevention is going to reduce costs.”
Health information technology might eventually reduce costs, by decreasing practice variations and encouraging use of more effective technologies. “But in the short run, there is really no good evidence that it will do this.”
Taxing high-benefit health plans could affect costs, but probably not substantially. Costs could be reduced if copayments are increased. However, the vast majority of expense is incurred when people are very sick. “For very good social reasons, we don’t want to give sick people a tremendous dependency on costs so that they are making life-or-death decisions based simply on the availability of capital in their family,” Dr Meltzer argued.
Solutions from the Payer Side
The only true engine for containing costs that has worked in the past, according to Dr Meltzer, is the combination of prospective payment and bundling. When Medicare instituted prospective payment at a fixed amount for hospitalizations, lengths of stay and expenditures fell dramatically. Bundling has several advantages: “it not only gives you a single number to target, it changes the politics of reimbursement. Once you bundle, you don’t have every group arguing for their own payment. They are all in it together.” It is likely that hospital stays will be bundled with ambulatory care, and physician fees will be combined with hospital care, Dr Meltzer said.
With more Americans having access to healthcare, the system will no longer be able to justify cross-subsidies from the insured to finance the uninsured’s costs. The healthcare system will have to move to a system of prospective costs and bundling, and the type of capitated care that was more prevalent 15 to 20 years ago. “Following that, costs will be cut. These will be large bundles, and there will be no one able to argue for themselves; we will have to fight among ourselves.”
This may not sound ideal from a reimbursement perspective, but Dr Meltzer says that from the standpoint of the healthcare system, this may not be bad. “There are wonderful examples of integrated organizations that provide wonderful care for their patients and of physicians and other providers who thrive within these organizations,” he said.
