Prescription for better U.S. health care spending: Four areas to consider

Streamlining administration, price controls and competition, spending growth targets, and value-based care will help rein in the wild growth of medical spending in the United States.

Those measures were part of “A Road Map For Action: Recommendations Of The Health Affairs Council On Health Care Spending And Value," a 54-page report published earlier this year. The nonpartisan group of experts aimed to moderate the growth of health care spending, while maximizing its value.

“The level of collaboration and compromise that will be required to implement these recommendations is significant,” the report said. “However, in steering policy makers and other stakeholders toward a set of recommendations that has been vetted and supported by a diverse group of experts with divergent interests, the Council hopes to provide a strong starting point for action. As noted previously, stakeholders must start where they are, with the tools currently available, and move forward. These recommendations contain a road map for doing so.”

Is spending ‘unsustainable?’

The problem, simply stated: “For decades, the level and growth of U.S. health care spending have diverged from both international and domestic norms, leading many to characterize rising health expenditures as ‘unsustainable,’” the report said.

Health care provided 22 million jobs, or 14% of the workforce, in 2019, and physicians, clinicians, and support staff have helped patients make improvements in morbidity and mortality. But by 2019, national health care spending grew 17.7% of the U.S. gross domestic product, then jumped to 19.7% in 2020, due to the COVID-19 pandemic.

That “rate of U.S. health care spending raises concerns about Americans’ continued ability to pay for all other goods and services,” at the government, work, and family levels, the report said. Comparisons to other developed nations beg the question whether the nation could get better value for the money.

The Council evaluated prices, volume, appropriate mix of care, and growth, noting recommendations must address all four to be effective. There is no single intervention that will solve the problem, but multiple recommendations with numerous entities are needed, the report said.

The recommendations are:

Administrative streamlining

• Standardize collection of data for provider directories, credentialing of providers, claims processing, and prior authorization. The Council recommended the U.S. Centers for Medicare & Medicaid Services (CMS) play the lead role in this effort.
• Harmonize quality measures. CMS uses at least 2,200 metrics for its programs, with states and local agencies adding hundreds more. A standard set of measures could save about $7 billion a year, according to a study the Council cited.

Price regulation and supports for competition

• Increase state and federal government monitoring of market competitiveness and proposed mergers, particularly with the U.S. Department of Justice, the Federal Trade Commission, and states.
• Limit price regulation in markets that cannot be competitive, such as rural areas where policy makers must balance market competition, geographic access, and affordability. That includes 249 metropolitan statistical areas (MSAs) and rural areas serving more than 91 million people.
• Support performance improvement plans and limited price regulation in markets that potentially could be competitive. There are 95 MSAs representing an estimated 80.5 million people.
• Bolster supports for competition where health care has a competitive market in 38 MSAs representing more than 149.11 million people. The Council noted those areas may become less competitive due to the current environment of mergers and acquisitions.

Spending growth targets

• Encourage states to collect, analyze, and discuss health care data to create spending growth targets in line with growth of the overall economy. Maryland and Massachusetts have systems in place to do so, and health care cost commissions are under consideration in California, Connecticut, Delaware, Nevada, New Jersey, Oregon, Rhode Island, and Washington.
• Develop mechanisms to monitor spending growth and enforce them.
• Offer federal support for data infrastructure needed to support spending growth targets.

Value-based payments

• Continue evaluating value-based payment models based on a limited number of models, stronger incentives for patients to use them, and increased flexibility in treating and managing patients for physicians and hospitals.
• Explore incentives for addressing health-supporting social needs, such as patient access to housing, food, and transportation.