Cost and access top Obama issues

January 1, 2009

Most consumers and healthcare experts want to see a reduction in costs or coverage expansion in 2009

But, there are differences in priorities, explains Michael Thompson, principal, PricewaterhouseCoopers (PwC) Health Industries. "The public wants President-elect Obama to address the high cost of care as his priority while health industry executives think his first priority should be to expand coverage for the uninsured," Thompson says.

Given the economic downturn, it is not surprising that the public is focused on cost. At the same time, health industry executives know that one way to take cost out of the health system is to increase the number of people who have insurance.

When looking at the chart, however, it's important to realize that cost, quality and access are not mutually exclusive goals, say experts.

"They are interrelated and must be addressed in a balanced way," Thompson says. "There is a lot of excess waste in the current system, and eliminating such waste can help to pay for increased coverage. Yet we also know that focusing only on cost containment can create misaligned incentives around quality. Reimbursement models, incentives and strategic cost reduction must not come at the expense of quality."

TriZetto's Larry Bridge, senior vice president of payer markets, agrees that cost, quality and access are all interrelated.

"It is easy for most people to jump on the cost aspect since it is the most visible part of the problem," Bridge says. "It is only when you really examine the issue that you begin to understand that if we don't find a way to provide coverage to the uninsured, it becomes almost impossible to have a meaningful impact on either cost or quality."

The biggest surprise-or disappointment-is that quality wasn't cited as the highest priority. The United States pays 47% more in healthcare per person each year than any other industrialized country, yet it scores lower on many quality measures. For example, medical errors are the fourth-leading cause of death in this country.

"Right now, we have a toxic financing system that does not reward quality," he says. "From the perspective of reimbursement, the optimal system is one that is based solely on providing the best possible outcome for patients and the community. From a revenue perspective, the health organizations that will thrive in the future will be those that create the greatest value for patients."

Defining appropriate treatment for the most common disease states and retooling health benefit plans and provider compensation to encourage treatment with evidence-based medicine guidelines will play an important role in improving cost and quality, Bridge says.

According to PwC's analysis, President-elect Obama's campaign proposals to reform healthcare would cost approximately $75 billion in 2009. Those costs will increase significantly, to a cumulative total of about $1 trillion by 2010.

"We believe that the upward trajectory of federal spending overall is unsustainable, and that funding the president-elect's health reform plan entirely with new money is unlikely," Thompson says. "About one-third of the required federal spending on health reform already exists and could be reallocated. Currently, this money largely goes to hospitals to compensate for free care."

The president-elect also has proposed significant investments in IT. "That will ensure that the health system is supported by a digital backbone that enables interoperability," Thompson says. "There is also increased emphasis on research on comparative effectiveness, movement toward prevention and wellness, as well as redesign of provider reimbursement away from volume-based to being more value-based."

-Tracey Walker Commentary is independent of source data