Payment reform needed to rein in healthcare spending

February 10, 2013

Slowing growth of spending on healthcare services by $2 trillion from 2014 to 2023 could be possible through a set of strategic policies.

Slowing growth of spending on healthcare services by $2 trillion from 2014 to 2023 could be possible through a set of strategic policies on payment reform, enhanced consumer choice, and curbs on increasing costs, according to the Commonwealth Fund Commission on a High Performance Health System.

“We have broad evidence that much of our spending is wasteful,” says Cathy Schoen, Commonwealth Fund senior vice president and lead author of the report. “Stabilizing health spending and targeting it in ways that improve health outcomes would free up billions of dollars for critically needed economic and social investments as well as higher wages for workers.”

The Commonwealth Fund’s report, “Confronting Costs: Stabilizing U.S. Health Spending While Moving Toward a High Performance Health Care System,” outlines a set of policies that, if implemented soon, could reduce federal spending by $1.04 trillion, state and local government spending by $242 billion, and employer spending by $189 billion over the next 10 years, according to the organization. The commission also predicts that the policies could result in $537 billion in savings through lower health insurance premiums and out-of-pocket costs over the next decade for families.

The report’s predictions rely on keeping healthcare spending growth to no more than the rate of long-term growth in the economy while improving health system performance. The strategy laid out by the commission to achieve these goals includes provider payment reforms to promote value and accelerate delivery system innovation, policies to expand options and encourage high-value choices by consumers, and improved market function, including reducing administrative costs and setting targets for spending growth.

In the set of policies described in the report, the commission says it envisions the public and private sectors adopting similar approaches to enable coherent payment reforms, positive consumer incentives, and system-wide action.