Report Claims More Government Can Solve Health Care Problems

Published March 1, 2008

The Commonwealth Fund, a New York-based advocacy group, has released a report claiming government-mandated health insurance, combined with personal health care savings options, could help reduce spending on health care in the United States by $1.5 trillion over the next 10 years.

Health policy analysts have criticized the report because its proposals would limit consumer choice and increase government control over health care.

“As one frequently sees with recommendations from The Commonwealth Fund, the ends are admirable and the means abominable,” said John R. Graham, director of health care studies at the Pacific Research Institute, a San Francisco-based think tank. “These recommendations would not achieve the ends they seek.”

Biased Toward Government

The report, titled Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, analyzed 15 federal policy options and assessed their potential to do two things: Reduce health care spending over the next 10 years and produce a better return on public- and private-sector investment in health care.

Among the policy options considered were promoting health information technology and patient-shared decision-making, reducing tobacco use, reducing obesity, creating positive incentives for good health, establishing pay-for-performance standards in hospitals, strengthening primary care and care coordination, limiting federal tax exemptions for premium contributions, resetting benchmark rates for Medicare Advantage plans, and limiting payment updates in high-cost geographic areas.

The authors of the December 18 report, Commonwealth Fund Senior Vice President Cathy Schoen and six of her colleagues, concluded having government mandate insurance coverage while providing health care saving options (government-run HSAs combined with price controls) could significantly improve health care.

“Improvements in delivery and financing would apply to a larger number of people,” Schoen wrote, which “could lower insurance administrative costs, and lead to a more integrated health care system.”

Tobacco Tax Hike

The report estimated $368 billion could be saved over 10 years by investing in education programs to help consumers improve their health care decision-making, incorporating cost information into insurance companies’ benefit evaluations, and creating tax and regulatory incentives for providers, payers, and consumers to use this information.

An additional $194 billion in savings could be achieved by raising Medicare reimbursement rates for primary care physicians as incentive to improve primary care services, the report noted.

The report also noted an estimated $191 billion could be saved over 10 years by increasing the federal cigarette tax an additional $2 per pack and using the added revenues to support state and federal anti-smoking programs.

The report also suggested $88 billion in health care spending could be saved simply by imposing government mandates to accelerate providers’ adoption of health information technology, which would enable providers to share information more effectively.

‘Unmitigated Disaster’

Prominent health policy experts disagreed with the report’s conclusions.

J.P. Wieske, director of state affairs for the Council for Affordable Health Insurance, said, “The proposed Commonwealth Fund solutions would be an unmitigated disaster. Many of the ideas, while well-intentioned, actually increase costs in our health system.”

Wieske agrees transparency is a wonderful goal, but he notes government-mandated transparency has been a disaster for every state that has tried it. “Requiring all providers to be paid the same rate–especially the government rate–is essentially a government takeover of health care,” he added. “It doesn’t solve the problem of health care overuse.”

Commonwealth Fund President Karen Davis defended the report in a press release, saying, “The report illustrates there are policy solutions out there that will save money and ensure that Americans get improved value for their health care dollars–but we need to start now.”

The government has neither the information nor the incentives to organize resources to achieve the goals The Commonwealth Fund has defined, countered Graham. “Instead,” he said, government should “give health care dollars and power back to the patients, who will decide how to manage their own affairs.”

Dr. Sanjit Bagchi ([email protected]) writes from India.

For more information …

Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, The Commonwealth Fund, December 18, 2007: